Regulatory Reporting requirements
Derivatives are governed by the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000. Derivatives are allowed only under the provisions of these regulations and amendments since, or with the prior permission of the Reserve Bank of India. The reporting requirements under RBI Master Direction No. 1/2016-17 dated July 5, 2016 on ‘Risk Management and Inter-Bank Dealings’ and RBI Circular No. DBOD. No. BP.BC.86/21.04.157/2006-07 dated April 20, 2007 on “Comprehensive Guidelines on Derivatives” should be adhering to.
Following are some of the reports to be submitted to RBI:
i) Daily statements of Foreign Exchange Turnover in Form FTD and Gaps, Position and Cash Balances in Form GPB.
ii) Statement of Nostro / Vostro Account balances on a monthly basis.
iii) Consolidated data on cross currency derivative transactions undertaken by residents.
iv) Details of exposures in foreign exchange as at the end of every quarter as per those details of exposures of all corporate clients who meet the prescribed criteria have to be included in the report. The AD banks should submit this report based on bank’s books and not based on corporate returns.
v) Details of option transactions (FCY-INR) undertaken on a weekly basis.
v) Total outstanding foreign currency borrowings under all categories as on the last Friday of every month.
vi) Monthly report (as on the last Friday of every month) on the limits granted and utilized by their constituents under the facility of booking forward contracts on past performance basis.
vii) Statement in form BAL giving details of their holdings of all foreign currencies on fortnightly basis through Online Returns Filing System (ORFS).
viii) A monthly statement, in respect of cover taken by FIIs, indicating the name of the FII / fund, the eligible amount of cover, the actual cover taken, etc.
ix) List (in triplicate) of all bank’s offices/branches, which are maintaining Rupee accounts of non-resident banks as at the end of December every year.
x) Quarterly report on the forward contracts booked and cancelled by SMEs and Resident Individuals.
xi) Consolidated data on the transactions undertaken by non-residents under the scheme.
xii) Doubtful transactions involving frequent cancellation of hedge transactions and / or the underlying trade transactions by non-residents under the scheme.
Another significant feature of the foreign exchange business of banks in India is the requirement of reporting of transactions, at specified intervals, by
the branches to the Reserve Bank of India by means of ‘R’ returns, as enumerated in the Exchange Control Manual. Those branches which handle foreign exchange transactions and are under obligation to report them directly to Reserve Bank are called the ‘Authorised Dealers’ (AD–also called ‘position maintaining branches’). The ADs can be nominated only with the approval of the Reserve Bank of India and each AD would have a unique Code Number, which must be mentioned in all reports to the Reserve Bank. In addition to these ADs, individual banks may also, subject to report to the Reserve Bank, nominate some other branches to handle the specified type of foreign exchange business but these branches will have to route their transactions through an AD only (such branches are often called ‘reporting branches’).
Moreover, ADs have to provide forms A2 for all inter bank crosscurrency deals done with overseas banks maturing during a fortnight to the RBI through the R-Return which is submitted on a fortnightly basis.
ADs also have to submit a report (MAP/ SIR) in the format as prescribed by the RBI. This is required to be prepared for 4 major currencies (i.e. US$, GBP, YEN and CHF). MAP will be prepared for the last reporting Friday of each month.
As required by RBI circular FMD.MSRG.No.67/02.05.002/2011-12 dated March 9, 2012, all inter-bank OTC foreign exchange derivatives are required to be reported on a platform to be developed by the Clearing Corporation of India (CCIL). All/selective trades in OTC foreign exchange and interest rate derivatives between the Category–I Authorised Dealer Banks/market makers (banks/PDs) and their clients are required to be reported on the CCIL platform subject to a mutually agreed upon confidentiality protocol. 10.191 As per RBI circular FMD.MSRG.No.72/02.05.002/2012-13 dated October 12, 2012, it is decided with effect from November 5, 2012 that following derivative products need to be reported to CCIL by the banks:
FCY(excluding USD)-INR forwards
FCY(excluding USD)-INR FX swaps
FCY-FCY forwards
FCY-FCY FX Swaps
FCY-FCY options