RBI HIKES FII LIMIT TO CANCEL, BOOK FORWARD DEALS

The Reserve Bank of India (RBI) has enhanced the limit to cancel and re-book forward contracts for foreign portfolio investors or Foreign Institutional Investors (FIIs) to 10% with immediate effect. They are currently allowed to cancel and re-book up to 2% of the market value of the portfolio at the beginning of the financial year. FIIs can undertake foreign currency-rupee swaps only for hedging
the flows relating to the IPO under the application supported by blocked amount mechanism. The amount of swap should not exceed the amount proposed to be invested in the IPO. The tenor of the swap should not exceed 30 days. But these contracts, once cancelled, cannot be re-booked. Rollovers under this scheme will also not be allowed.