FOREIGN CURRENCY SWAP ACCOUNTING

With regard to swaps already entered into, banks are advised to follow the following procedure for accounting of gains / losses arising out of swap ;

• The gains / losses arising out of such swap transactions should be computed separately.
• Losses, if any, should be fully provided for;
• Gains should be taken to a special reserve through Profit & Loss Account;
• Any draw done from such reserve should be made only for meeting future losses arising out of swap transaction concerned.