What changed?
Previously, non-residents could enter into non-deliverable derivative contracts (NDDCs) involving INR with eligible AD Category-I banks operating IFSC Banking Units and AD Category-III Standalone Primary Dealers, without having to demonstrate a specific purpose.
RBI now permits these transactions only for hedging purposes.
RBI has also clarified that the FERR applies whenever an AD Bank purchases FCY against INR under an INR FX derivative contract. This broadens the framework introduced on 10th October 2026, under which the FERR requirement applied only to current account hedging transactions above the prescribed threshold.
Existing FX derivative contracts remain unaffected. The revised hedging requirement applies only to contracts entered into after 12th October 2026.
For further details, please see:
Risk Management and Inter-Bank Dealings
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