RBI TO BOOK BANKS, COs FOR FOREX ABUSE
The Reserve Bank of India (RBI) has said that the banks have violated Foreign Exchange Regulations
Act (FEMA) while transacting in currency derivatives in the last few years. The central bank has stated in a submission to the Orissa High Court in response to a public interest litigation that violation of FEMA guidelines were committed by banks and exporters, who in many cases entered into derivative contracts far in excess of their genuine underlying exposure and also tried to use the hedging tools as profit making tools. The central bank may further penalize those who violated FEMA norms.
Act (FEMA) while transacting in currency derivatives in the last few years. The central bank has stated in a submission to the Orissa High Court in response to a public interest litigation that violation of FEMA guidelines were committed by banks and exporters, who in many cases entered into derivative contracts far in excess of their genuine underlying exposure and also tried to use the hedging tools as profit making tools. The central bank may further penalize those who violated FEMA norms.
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