Brief Overview:

A revised framework has been introduced for Authorised Dealers (ADs) to tighten controls on foreign exchange derivatives and inter‑bank transactions, including restrictions on non‑deliverable derivatives, rebooking of cancelled contracts, and related‑party dealings.

Technical Details:

1) Non‑deliverable derivatives

ADs must not offer non‑deliverable INR derivative contracts to residents or non‑residents.

2) Rebooking of cancelled contracts

ADs are prohibited from rebooking any cancelled FX derivative (deliverable or non‑deliverable) on or after 1 April 2026.

3) Related‑party transactions

ADs must not enter into FX derivative contracts with their related parties.

Takeaways:

The circular aims to make the FX derivatives market safer by reducing speculative activity, preventing misuse of contracts, and ensuring ADs focus on genuine hedging transactions.

For further details, please see:

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13363&Mode=0

For any queries/clarifications, please feel free to ping us and we will be happy to chat: