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Jayanta Bandyopadhyay   10 June 2024

Un hedged foreign currency exposure certificate-group companies

One LLP having un hedged foreign currency exposure is obtaining auditor's certificate mentioning that as parent unlisted public ltd Co has taken hedge position, it has not hedged. Can Group Companies involving LLP & CO could do it lawfully, as partners of llp and members of Co are not commo- hardly 60% common. Please guide


 1 Replies

T. Kalaiselvan, Advocate (Advocate)     10 June 2024

Unhedged Foreign Currency Exposure (UFCE)” shall mean Foreign Currency Exposure (FCE) excluding items which are effective hedge of each other. While estimating UFCE of an entity, banks shall consider only two types of hedges - financial hedge and natural hedge.
Computation of UFCE:
Banks shall ascertain the Foreign Currency Exposure (FCE) of all entities2 at least on an annual basis. Banks shall compute the FCE following the relevant accounting standard applicable for the entity.
Banks shall assess the Unhedged Foreign Currency Exposure (UFCE) of entities with FCE by obtaining information on UFCE from the concerned entity.

Provided that the information on UFCE shall be obtained from entities on a quarterly basis based on statutory audit, internal audit or self-declaration by the concerned entity.
Provided further that UFCE information shall be audited and certified by the statutory auditors of the entity, at least on an annual basis.

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