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    Question

    In the context of RBI’s guidelines on foreign exchange risk management, what is the role of an Authorized Dealer (AD) in monitoring users’ positions beyond the USD 100 million exposure limit?

    A To approve all foreign exchange transactions Correct Answer Incorrect Answer
    B To ensure positions are backed by contracted exposure Correct Answer Incorrect Answer
    C To impose penalties for over-exposure Correct Answer Incorrect Answer
    D To regulate forward contracts on behalf of the user Correct Answer Incorrect Answer
    E To provide real-time data to the RBI Correct Answer Incorrect Answer

    Solution

    The circular "Risk Management and Inter-Bank Dealings" mandates that Authorized Dealers monitor positions beyond USD 100 million to ensure they are backed by contracted exposure.

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