RBI asks banks to monitor unhedged forex exposures of companies

.....In February 2012 banks were directed to rigorously evaluate the risks arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium while extending fund-based and non fund-based credit facilities. It had also asked banks to consider stipulating a limit on the unhedged position of corporates on the basis of banks board-approved policy. However, the central bank is not convinced with the banks actions. Hence, the RBI reiterating its directive has asked banks to implement the norms and submit a compliance or action taken reports to the Reserve Bank before end-December 2012 after obtaining the approval of their board of directors. The central bank is planning to put in place a detailed guideline to ensure forex exposures of corporates are covered. 

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