Page 59 - BANKING FINANCE February 2024

RBI CIRCULAR

8. The revised instructions shall come into force from the A (Section I) of the Master Direction – Risk Manage-
date of issue of the circular. The circular ment and Interbank Dealings dated July 5, 2016, as
UBD.CO.BPD(PCB).No.20/16.05.000/2013-14 dated amended from time to time, and in supersession of the
September 27, 2013 will thus stand repealed. notifications listed in the Annex-II.
4. Authorised Persons shall mean Authorised Dealer Cat-
Risk Management and Inter-Bank Deal- egory - I banks and for the purpose of exchange traded
ings – Hedging of foreign exchange risk currency derivatives, Recognised Stock Exchanges and
Recognised Clearing Corporations, authorised under
January 5, 2024 Section 10 (1) of the Foreign Exchange Management
Act, 1999 (42 of 1999).
1. Please refer to paragraph 1 of the Statement on De-
5. The Directions contained in this circular have been is-
velopmental and Regulatory Policies, issued as a part
sued under Sections 10(4) and 11(1) of the Foreign Ex-
of the Bi-monthly Monetary Policy Statement for 2023-
24 dated December 08, 2023 on review of the regula- change Management Act, 1999 (42 of 1999) and Sec-
tion 45W of the Reserve Bank of India, 1934 (02 of
tory framework for hedging of foreign exchange risks.
1934) and are without prejudice to permissions/ ap-
Attention of Authorised Persons is invited to the For-
provals, if any, required under any other law.
eign Exchange Management (Foreign Exchange Deriva-
tive Contracts) Regulations, 2000 dated May 03, 2000
(Notification No. FEMA.25/RB-2000 dated May 03, Amendment to the Master Direction
2000), as amended from time to time and Master Di- (MD) on KYC
rection – Risk Management and Inter-Bank Dealings
dated July 05, 2016, as amended from time to time. January 4, 2024
2. The Foreign Exchange Management (Foreign Exchange 1. Please refer to the Master Direction (MD) on KYC dated
Derivative Contracts) (First Amendment) Regulations, February 25, 2016, as amended from time to time, in
2020 (Notification no. FEMA.398/RB-2020 dated Feb- terms of which Regulated Entities (REs) have to under-
ruary 18, 2020) and A. P. (DIR Series) circular no. 29 take Customer Due Diligence (CDD), as per the process
dated April 07, 2020 (which came into effect from Sep- laid out therein, for their customers.
tember 01, 2020) were issued after a comprehensive
2. In the extant Direction, the definition of Politically Ex-
review and public consultation. The foreign exchange
posed Persons (PEPs) is provided in sub-clause (xvii) of
risk management facilities have been further reviewed
based on the feedback received from market partici- clause (a) of Section 3 of the MD on KYC. However, in
order to provide better clarity, it has been decided to
pants and experience gained since the revised frame- include the definition of PEPs as an explanation to Sec-
work came into force. Also, the Directions in respect
of all types of foreign exchange transactions (including tion 41 of the Master Direction as under:
cash, tom and spot) have been consolidated. Further, “Explanation: For the purpose of this Section, “Politi-
the Directions contained in the Currency Futures (Re- cally Exposed Persons” (PEPs) are individuals who are
serve Bank) Directions, 2008 (Notification No. FED.1/ or have been entrusted with prominent public functions
DG(SG)-2008 dated August 06, 2008), as amended from by a foreign country, including the Heads of States/
time to time, and Exchange Traded Currency Options Governments, senior politicians, senior government or
(Reserve Bank) Directions, 2010 (Notification No. judicial or military officers, senior executives of state-
FED.01/ED(HRK)-2010 dated July 30, 2010), as amended owned corporations and important political party offi-
from time to time, are now being incorporated in the cials.”
Master Direction – Risk Management and Inter-Bank 3. Consequently, the sub-clause (xvii) of clause (a) of Sec-
Dealings. tion 3 of the above quoted Master Direction has been
3. The revised Directions are provided at Annex-I to this removed. The relevant Sections of the MD on KYC are
circular. These Directions shall come into effect from hereby amended to reflect the changes as mentioned
April 05, 2024, replacing the existing Directions in Part above.

54 | 2024 | FEBRUARY | BANKING FINANCE