**Summary:**
This circular, RBI/2024-25/17 A. P. DIR Series Circular No. 01, issued by the Reserve Bank of India (RBI) on April 15, 2024, amends the existing regulations regarding hedging of gold price risk in overseas markets for resident entities. Building upon A. P. DIR Series Circular No. 19 dated December 12, 2022, which permitted hedging on exchanges within the International Financial Services Centre (IFSC), this circular now allows resident entities to additionally hedge their gold price risk using Over-the-Counter (OTC) derivatives in the IFSC. This expanded flexibility is subject to the stipulations outlined in the Master Direction Foreign Exchange Management Hedging of Commodity Price Risk and Freight Risk in Overseas Markets Directions, 2022, as amended. The instructions are effective immediately, and the Master Direction has been updated accordingly. The circular is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). For inquiries, contact the Financial Markets Regulation Department, Central Office, 9th Floor, Central Office Building, Shahid Bhagat Singh Road, Fort, Mumbai – 400 001. Tel: 91-22-2260 1000, Fax: 91-22-22702290, Email: cgmfmrdrbi.org.in. Contact person: Dimple Bhandia, Chief General Manager.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and monetary policy.
All Authorised Dealer Category I Banks: A category of banks authorized to deal in foreign exchange under the regulations of the Reserve Bank of India.
International Financial Services Centre: An area within India that allows for financial services to be provided to non-residents and residents, often with more liberal regulations.
International Financial Services Centres Authority: The regulatory body for International Financial Services Centres (IFSC) in India.
Foreign Exchange Management Act, 1999: An Act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Mumbai, Maharashtra: The location of the Central Office of the Financial Markets Regulation Department of the Reserve Bank of India.
Master Direction Foreign Exchange Management Hedging of Commodity Price Risk and Freight Risk in Overseas Markets Directions, 2022: A comprehensive set of guidelines issued by the Reserve Bank of India governing the hedging of commodity price risk and freight risk in overseas markets.
Dimple Bhandia: Chief General Manager at Reserve Bank of India.
भारतीय �रज़व� ब�क
RESERVE BANK OF INDIA
RBI/2024-25/17
A. P. (DIR Series) Circular No. 01 April 15, 2024
All Authorised Dealer Category – I Banks
Madam / Sir,
Hedging of Gold Price Risk in Overseas Markets
Please refer to Paragraph 2 of the Statement on Developmental and Regulatory
Policies announced as a part of the Bi-monthly Monetary Policy Statement for 2023-
24 dated February 08, 2024, regarding hedging of price risk of gold in overseas
markets. Attention is also invited to the Master Direction – Foreign Exchange
Management (Hedging of Commodity Price Risk and Freight Risk in Overseas
Markets) Directions, 2022.
2. Resident entities were permitted to hedge their exposure to price risk of gold on
exchanges in the International Financial Services Centre (IFSC) recognised by the
International Financial Services Centres Authority (IFSCA) vide A. P. (DIR Series)
Circular No. 19 dated December 12, 2022. To provide further flexibility to resident
entities to hedge their exposures to price risk of gold, it has now been decided to permit
resident entities to hedge their exposures to price risk of gold using OTC derivatives
in the IFSC in addition to the derivatives on the exchanges in the IFSC, subject to the
stipulations set out in the Master Direction – Foreign Exchange Management (Hedging
of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022, as
amended from time to time.
िव�ीय बाज़ार िविनयमन िवभाग, क��ीय कायार्लय, 9वी मंिजल, केन्�ीय कायार्लय भवन, शहीद भगत �संह माग,र् फोटर्, मुंबई – 400 001
फोन: (91-22) 2260 1000, फैक्स: (91-22) 22702290, ई-मले : cgmfmrd@rbi.org.in
Financial Markets Regulation Department, Central Office, 9th Floor, Central Office Building, Shahid Bhagat Singh Road, Fort,
Mumbai – 400 001
Tel: (91-22) 2260 1000, Fax: (91-22) 22702290, E-mail: cgmfmrd@rbi.org.in
�हन्द� आसान है, इसका प्रयोग
बढ़ाइए3. These instructions shall be applicable with immediate effect. The Master Direction
– Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk
in Overseas Markets) Directions, 2022 has been updated accordingly.
4. The directions contained in this circular have been issued under Sections 10(4) and
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,
(Dimple Bhandia)
Chief General Manager
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