RBI Restricts Forex Derivative Deals with Related Parties
RBI Restricts Forex Derivative Deals with Related Parties
Risk Management and Inter-Bank Dealings – Updated Directions
Authorised Dealers are advised to refer to earlier circulars issued on this subject, including those dated March 27, 2026, April 1, 2026, and the Master Direction on Risk Management and Inter-Bank Dealings issued on July 5, 2016 (as amended).
Upon review, the instructions issued under the circular dated April 1, 2026 have been withdrawn. It is now clarified that Authorised Dealers shall not enter into any foreign exchange derivative contracts involving INR with related parties, except in the following situations:
- Cancellation or rollover of existing contracts; and
- Transactions executed on a back-to-back basis with non-related, non-resident entities, in accordance with the provisions of the applicable Master Direction.
For the purpose of these instructions, the term “related parties” shall carry the same meaning as defined under relevant accounting standards, including Ind AS 24, IAS 24, or any equivalent framework.
These directions take effect immediately.
This circular is issued under the powers conferred by Sections 10(4), 11(1), and 11(2) of the Foreign Exchange Management Act, 1999, and does not override any requirement for approvals or permissions under other applicable laws.
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