Amendments to ECM - Forward exchange cover for FIIs.

1. Attention of authorised dealers is drawn to AD (MA Series) Circular No. 19 dated 16th June, 1998 {[1998] 30 CLA (St.) 4} regarding forward cover to foreign institutional investors (FIIs). It is proposed to gradually extend the facility of forward cover to the existing investments of FIIs in equity market. Accordingly, it has been decided that at present authorised dealers may provide forward exchange cover to FIIs to the extent of 15 per cent of market value of investments (duly reckoning pipeline transactions) in equity as at the close of business on 11th June, 1998 converted into dollar terms at the rate of US $ 1 = Rs. 42.38. This will be in addition to the facility already available for incremental investments.

2. Authorised dealers may satisfy themselves about the aggregate eligibility for cover on the basis of declaration furnished by the FII.

3. All other relevant provisions including reporting requirement contained in the circular dated 16th June, 1998 cited above will continue to remain in force.