The Reserve Bank of India has released current norms for Indian companies to hedge their supplier disclosure from shifting prices in external markets. The central bank has projected to present flair of hedging subsidiary price risk for select metals.
Rendering to the draft standards, an eligible entity’s exposure is termed direct if it transacts in commodities whose prices are fixed by reference to an international benchmark or is defined by a formula. Indirect exposure is that where prices of commodities are not linked to a reference benchmark or formula. Hedging of price risk is proposed to be allowed for all commodities in case of direct exposure.
In the subsidiary disclosure, hedging is allowed for aluminum, copper, lead, zinc, nickel, and tin. This plan would be revised per annum, the draft said. The RBI also said banks can document qualified entities to hedge service price risk outside by means of allowable implements focuses on convinced circumstances. The central bank has pursued explanations on the flow by the culmination of January.
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