RBI allows cancellation of forward contracts

Mumbai, Jun 19 (UNI) In a bid to provide flexibiliy for residents investing in equities and loans abroad, the Reserve Bank of India today said the forward contarcts reached for hedging exchange risks in overseas investments can be cancelled.

In a notification, RBI has also said 50 per cent of the cancelled contracts can be re-booked.

''With a view to provide greater flexibility to residents with overseas direct investments, it has been decided to allow cancellation of such forward contracts. Accordingly, Authorised Dealer Category banks may allow cancellation of forward contracts,'' said RBI in a notification today.

The Reserve Bank, in its annual policy statement, had proposed steps needed to be adopted for bringing flexibility in overseas direct investments.

The present directive is learned to have come in this regard.

UNI