RBI allows resident entities to hedge gold price risks at IFSC

Reserve Bank of India (RBI) Governor Shaktikanta Das, arrives to address a press conference on RBI’s monetary policy at RBI headquarters in Mumbai, India, Wednesday, December 7, 2022.
| Photo Credit: AP

Resident entities from India will now be permitted to hedge gold price risks at the International Financial Services Centre, RBI Governor Shaktikanta Das said on Wednesday, December 7, 2022.

At present, resident entities in India are not permitted to hedge their exposure to gold price risk in overseas markets.

“With a view to providing greater flexibility to these entities to hedge the price risk of their gold exposures efficiently, it has been decided to permit resident entities to hedge their gold price risk on recognised exchanges in the IFSC,” Das said after announcing the bi-monthly policy review.

The detailed instructions on the same will be issued separately by the central bank, he added.

Meanwhile, Das also announced to extend the dispensation of enhanced HTM (held to maturity) limit of 23 per cent up to March 31, 2024, and allow banks to include securities acquired between September 1, 2020, and March 31, 2024, in the enhanced HTM limit.

The Reserve Bank had increased the limits under the HTM category from 19.5 per cent to 23 per cent of net demand and time liabilities (NDTL) in respect of statutory liquidity ratio (SLR) eligible securities acquired on or after September 1, 2020, up to March 31, 2023.

This dispensation of enhancement in HTM limit was made available up to March 31, 2023, he said, adding that HTM limits would now be restored from 23 per cent to 19.5 per cent in a phased manner starting from the quarter ending June 30, 2024.