Treasury & Forex Advisory · Question

What documents does a bank usually ask for before booking a forward contract?

Short answer

Dealer banks usually ask for proof of the underlying transaction, such as an order, contract or invoice, along with your know-your-customer papers, a signed master agreement, and board or authority approval for the person transacting. They also check that you have a hedging limit. Exact requirements vary by bank and by the rules in force.

In more detail

The bank is not being difficult. It must confirm that the contract covers a genuine business flow and that you have the authority and capacity to enter it. Expect requests in three groups.

On identity and authority, the bank wants know-your-customer documents for the business and its signatories, a board resolution or partnership authority naming who can sign and give dealing instructions, and specimen signatures with contact details for confirmations.

On the relationship and limit, it will usually ask you to sign a master agreement or hedging facility document that sets the terms for deals, and it will want a sanctioned limit for forward cover. Banks treat this limit as a form of credit exposure, since a contract can move against you and leave you owing money. Your lender may therefore ask for margin or look at your other facilities, especially if you borrow from several banks.

On the underlying exposure, the paperwork depends on the purpose.

For exports: the purchase order, contract, proforma or invoice, and shipping details once shipped.
For imports: the supplier order or invoice and relevant import documents.
For foreign currency loans: the loan agreement and repayment schedule.

If you are covering an anticipated flow, expect to explain the basis, perhaps through past shipment history.

Prepare a standing file

Keep a folder with authority documents and recent underlying papers ready. It shortens booking time when a quote is moving fast.

Requirements change with regulation and each bank's policy, so ask your relationship manager for the current checklist.

Key points

Banks want proof that a contract relates to a genuine underlying exposure.
Authority documents show who may sign and instruct the bank.
A master agreement and a hedging limit usually come before the first booking.
Forward limits are treated as a credit exposure and may need margin.
Always request the bank's present checklist rather than relying on older lists.

Who this applies to

Businesses booking a forward for the first time.
Finance staff who want dealing papers ready ahead of quick market moves.
Owners changing banks or adding a second dealer bank.

Last reviewed 3 October 2026

This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority. Lalsar Holdings' financial advisory and financing work is advisory and facilitation only. Lalsar Holdings is not a lender. Sanction and disbursement of any credit facility is at the sole discretion of the partner bank, NBFC, or financial institution involved, subject to their own eligibility criteria and credit policy.