image

Prudential Norms for Off-balance Sheet Exposures of Banks – Restructuring of derivative contracts

RBI/2016-17/45
DBR.No.BP.BC.7/21.04.157/2016-17

August 25, 2016

All Scheduled Commercial Banks
(Excluding Local Area Banks and
Regional Rural Banks)

Dear Sir/Madam,

Prudential Norms for Off-balance Sheet Exposures of Banks – Restructuring of derivative contracts

Please refer to circular DBOD.No.BP.BC.57/21.04.157/2008-09 dated October 13, 2008 on the captioned subject. Para 2.2 of the circular requires that in cases where a derivative contract is restructured, the mark-to-market value of the contract on the date of restructuring should be cash settled. In this context, it is clarified that cash settlement of only the change in mark-to-market value of the restructured derivative contract is required. It may, however, be ensured that the restructuring of the derivative contract is carried out at prevalent market rates, and not on the basis of off-market rates.

Yours faithfully,

(Ajay Kumar Choudhary)
Chief General Manager

profile image

About eMinds Legal

eMinds Legal

eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

Leave a Reply

Your email address will not be published. Required fields are marked *

Corporate Law Referencer

Corporate Law Referencer

Corporate Law Referencer

India’s Leading Compliance Software

India’s Leading Compliance Software

Get A Demo Today !

Recent Articles

Recent Legal updates

Recent Gst Updates