Tightening the norms for foreign exchange risk cover, the Reserve Bank of India on Monday said only companies with a net worth of Rs.200 crore could use derivatives to hedge against risk of volatility in currency rates.
Earlier in February, the RBI had pegged the net worth limit at Rs.100 crore while allowing corporates to hedge against exchange rate risks associated with trade transactions and external borrowings. “It has now been stipulated that listed companies and their subsidiaries or joint ventures or associates having common treasury and consolidated balance sheet or unlisted companies with a minimum net worth of Rs.200 crore can undertake cost reduction structures,” the RBI said in a notification.
