In recent times, Indian companies have grabbed headlines for all the wrong reasons. Swaps, options, exotic derivatives, structured products, etc., the list is endless. Several legal disputes have cropped up between financial service providers and clients, alleging mis-selling and misrepresentation of derivatives which added to the uncertainty and fear factor. The article addresses this issue.

Currency Derivatives became the talk of the newspapers in India in November 2007 when a software technology company Hexaware Technology reported a huge loss of over Rs. 103 cr due to forex currency derivative deals, which according to the company, were unauthorized deals entered into by a senior treasury official of the company. Subsequently several cases of losses in currency derivatives surfaced. Many companies refused to pay the banks the amount of loss incurred by the banks on behalf of the company in execution of currency deals.

This led to a legal disputes between banks and companies. Several other companies like Wockhardt, KPIT Cummins (loss reported Rs. 89 cr), Maruti, and AirTel have declared losses to the tune of several crores while providing mark-to-market losses owing to such currency deals. Several major banks like ICICI Bank, Axis Bank, SBI, etc., have made huge provisions in their books while declaring their balance sheets for FY2007-08.

Treasury Management Magazine, Currency Derivatives, Indian Corporates, Financial Service Providers, Indian Rupees, INR, Derivatives Market, Derivative Transactions, Financial Assets, Risk Management, Currency Options, Small and Medium Enterprises, SMEs, Foreign Exchange Management.