Forward Contract Booking Limit Raised to $250,000 for Residents
Current · Source: Reserve Bank of India · RBI/2013-14/557 · issued 07 Apr 2014 · ~2 min read
Quick answerRBI has raised the limit for booking forward contracts without underlying documents from $100,000 to $250,000 for resident individuals, firms, and companies with actual or anticipated forex exposures, based on a simple declaration.
The rule, in the simplest words
Resident individuals, firms, and companies can now book forward contracts up to $250,000 without underlying documents, based on a simple declaration.
This limit has been increased from $100,000 to $250,000 for those with actual or anticipated foreign exchange exposures.
Banks must update their internal processes and reporting formats as per the revised annexes.
How it plays out — a real example
A forex & trade-finance officer in Indore, Mr. Kumar, can now offer higher forward contract limits to his resident customers without demanding underlying documents, simplifying hedging for smaller exposures. He will need to update his internal processes and reporting formats as per the revised annexes to comply with the new facility.
What changed
The limit for booking forward contracts without underlying documentation has been increased from US$ 100,000 to US$ 250,000 for all resident individuals, firms, and companies with actual or anticipated foreign exchange exposures. The new facility requires only a simple declaration, removing the need for further documentation. Existing facilities for SMEs remain unchanged.
What it means for you
Banks can now offer higher forward contract limits to a broader set of resident customers without demanding underlying documents, simplifying hedging for smaller exposures. This liberalisation may increase demand for forex derivative products among individuals and small businesses. Banks must update their internal processes and reporting formats as per the revised annexes.
What you must do
Update internal guidelines to allow forward contract booking up to $250,000 based on a simple declaration without underlying documents.
Ensure customers submit the revised application cum declaration form as per Annex I of the circular.
Report these contracts using the revised format provided in Annex II.
Communicate the new facility to all constituents and customers through appropriate channels.
Verify that the total forward contracts booked per customer across all branches do not exceed the $250,000 limit.
Who it affects
AD Category-I banks, Resident individuals with forex exposures, Resident firms and companies with forex exposures, SMEs (existing facilities unchanged)
❓ Common questions
What is the new limit for booking forward contracts without underlying documents?
The limit has been raised from US$ 100,000 to US$ 250,000 for resident individuals, firms, and companies with actual or anticipated foreign exchange exposures.
Do customers need to provide any documents to book these forward contracts?
No, they only need to submit a simple declaration as per the revised format. No further documentation is required.
Does this circular affect the existing facilities for SMEs?
No, the existing facilities for SMEs remain unchanged as per earlier circulars.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/557
A.P. (DIR Series) Circular No. 119
April 07, 2014
To,
All Authorised Dealer Category – I banks
Madam / Sir,
Risk Management & Inter-Bank Dealings:
Booking of Forward Contracts - Liberalisation
Please refer to paragraph 23 of the first Bi-Monthly Monetary Policy Statement, 2014-15 wherein, inter alia, it has been proposed to allow all resident individuals, firms and companies with actual foreign exchange exposures to book foreign exchange derivative contracts up to US$ 250,000 on declaration, subject to certain conditions.
2. Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 ( Notification No.FEMA.25/RB-2000 dated May 3, 2000 ) as amended from time to time and A.P. (DIR Series) Circular No.15 dated October 29, 2007 regarding liberalisation in respect of booking of forward contracts, in terms of which resident individuals, to manage/ hedge their foreign exchange exposures arising out of actual or anticipated remittances, both inward and outward, are allowed to book forward contracts, without production of underlying documents, up to a limit of US$ 100,000 based on self-declaration.
3. With a view to further liberalising the existing facilities, it has now been decided to allow all resident individuals, firms and companies, who have actual or anticipated foreign exchange exposures to book foreign exchange forward contracts up to US$ 250,000 on the basis of a simple declaration without any requirement of further documentation. The existing facilities in terms of the aforementioned circular for Small and Medium Enterprises (SMEs) having direct and/ or indirect exposures to foreign exchange risk permitting them to book/ cancel/ roll over forward contracts without production of underlying documents to manage their exposures effectively subject to conditions specified therein shall remain unchanged.
4. The revised reporting format is provided in Annexes I and II of this circular. All other conditions including tenor of the contracts as laid down in A.P. (DIR Series) Circular No.15 dated October 29, 2007 will apply mutatis mutandis.
5. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
6. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager- in- Charge
Annex I
[Annex to A. P. (DIR Series) Circular No. 119 dated April 07, 2014]
Application cum Declaration for booking of forward contracts up to
US$ 250,000 by Resident Individuals, Firms and Companies
(To be completed by the applicant)
I. Details of the applicant
a. Name …………………………..
b. Address…………………………
c. Account No……………………..
d. PAN No………………………….
II. Details of the foreign exchange forward contracts required
1. Amount (Specify currency pair) ………………………………
2. Tenor ………………………………………………….
III. Notional value of forward contracts outstanding as on date ……….
IV. Details of actual / anticipated remittances
1. Amount :
2. Remittance Schedule :
3. Purpose :
Declaration
I/We, ………………. …………(Name of the applicant), hereby declare that the total amount of foreign exchange forward contracts booked with the ---------------(designated branch) of ------------------(bank) in India is within the limit of US$ 250,000/- (US Dollar Two lakh and Fifty Thousand only) and certify that the forward contracts are meant for undertaking permitted current and / or capital account transactions. I/We also certify that I have not booked foreign exchange forward contracts with any other bank / branch. I/We have understood the risks inherent in booking of foreign exchange forward contracts.
Signature of the applicant
(Name)
Place:
Date:
Certificate by the Authorised Dealer Category – I bank
This is to certify that the customer …………(Name of the applicant) having PAN No. ……. has been maintaining an account ……..(no.) with us since ……..* We certify that the customer meets the AML / KYC guidelines laid down by RBI and confirm having carried out requisite suitability and appropriateness test.
Name and designation of the authorised official:
Place:
Signature:
Date: Stamp and seal
* month / year
Annex II
[Annex to A. P. (DIR Series) Circular No.119 dated April 07, 2014]
Statement – Details of Forward contracts booked and cancelled under Self-declaration
For the Quarter ended–
Category
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/557 · issued 07 Apr 2014. The plain-English explanation above is BankPulse’s own independent summary.
Verify that the total forward contracts booked per customer across all branches do not exceed the $250,000 limit.
💻 IT / Systems
Ensure customers submit the revised application cum declaration form as per Annex I of the circular.
📜 Compliance
Update internal guidelines to allow forward contract booking up to $250,000 based on a simple declaration without underlying documents.
Report these contracts using the revised format provided in Annex II.
Communicate the new facility to all constituents and customers through appropriate channels.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks, Resident individuals with forex exposures, Resident firms and companies with forex exposures, SMEs (existing facilities unchanged)), your first concrete step on “Forward Contract Booking Limit Raised to $250,000 for Residents” is: “Update internal guidelines to allow forward contract booking up to $250,000 based on a simple declaration without underlying documents.” (RBI issued this 07 Apr 2014).
Circular: RBI/2013-14/557 -- Forward Contract Booking Limit Raised to $250,000 for Residents
Issued: 07 Apr 2014
Action required: Update internal guidelines to allow forward contract booking up to $250,000 based on a simple declaration without underlying documents.
Action required: Ensure customers submit the revised application cum declaration form as per Annex I of the circular.
Action required: Report these contracts using the revised format provided in Annex II.
Action required: Communicate the new facility to all constituents and customers through appropriate channels.
Action required: Verify that the total forward contracts booked per customer across all branches do not exceed the $250,000 limit.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8829&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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