Brief Overview:
The AD Category- I Banks (“AD Banks”) are now allowed to offer non-deliverable derivatives contracts (“NDDCs”) involving INR to resident non-retail users.
Technical Details:
● AD Banks operating an IFSC Banking Unit (“IBU”) are permitted to offer NDDCs to (non-retail) resident users. These contracts are to be cash settled in INR.
● Previously, AD Banks having an IBU were permitted to offer NDDCs to only non-residents. These NDDCs were cash settled in foreign currency only.● Also, flexibility has been introduced to cash settle NDDCs in INR or foreign currency between:
> 2 AD Cat-I banks; and
> AD Cat-I bank and a person resident outside India.
● Accordingly, the Master Direction on Risk Management and Interbank Dealings has been amended.
JC Key Takeaways:
● This step will boost the INR market. These amendments also provide greater flexibility to users to efficiently design their hedging programs.
For further details, please see:
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
● Ms. Smrithi Nair (smrithi.nair@jclex.com)
● Ms. Aashka Shah (aashka.shah@jclex.com)
