Reserve
Bank of India (RBI) on Wednesday, 7 August 2008 allowed exchange-traded
currency futures by putting out guidelines on the same. RBI says that
banks need to have a minimum net worth of Rs 500 crore, net
non-performing assets (NPAs) less than 3% and minimum capital adequacy
of 10%, to trade in this derivative instrument. Another requirement is
that the bank which intends to trade in the currency segment also
should not have incurred losses over the past three years.
RBI
has initially allowed only resident Indians or locals to participate in
currency futures. Initially, trading contracts denominated in the US
dollar and the Indian rupee will only be allowed. The size of the
contract has been set at $1000 and the tenure, at 12 months. The
central bank has specified that the contracts will be quoted and
settled only in rupees.
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