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Corporate Laws Central Ministry of Finance Foreign Exchange Management Act, 1999

Master Direction-Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022

12-Dec-2022 | RBI/2022-2023/152, 153, 154 A. P. (DIR Series) Circular No. 20

The Reserve Bank of India has issued the Master Direction-Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022.
Hedging is the activity of undertaking a derivative transaction to reduce an identifiable and measurable risk and the Eligible entities refers to residents other than Individuals.
1. Commodities whose price risk may be hedged are:
i. In case of direct exposures to commodity price risk: All commodities (except Gems and Precious stones). Price risk of gold may only be hedged as provided at Para 5 (ii) of these directions.
ii. In case of indirect exposures to commodity price risk: Aluminum, Copper, Lead, Zinc, Nickel, and Tin. This list of eligible commodities would be reviewed annually.
2. Generic Products Structured Products are permitted products

For more details, refer to the attachment.

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