Commodity Hedging - RBI Clarification
RESIDENT entities in India, engaged in import and export trade or as otherwise approved by the Reserve Bank from time to time, are permitted to hedge the price risk of permitted commodities in the international commodity exchanges / markets as per Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000.
Now, RBI clarifies that all AD Category-I banks are permitted to grant permission to companies to hedge the price risk in respect of any commodity (except gold, silver, platinum) in the international commodity exchanges/ markets as specified under the delegated route.
Further, AD Category-I banks can also grant permission to unlisted companies to hedge price risk on import/ export in respect of any commodity (except gold, silver, platinum) in the international commodity exchanges/ markets subject to guidelines.
RBI AP(DIR Series) Circular No. 68, Dated January 17, 2012