Risk Management and Inter-Bank Dealings – Revised Directions
Risk Management and Inter-Bank Dealings – Revised Directions
Attention of Authorised Dealers (ADs) is invited to A.P. (DIR Series) Circular No. 24 dated 27 March 2026 and the Master Direction – Risk Management and Inter-Bank Dealings issued on 5 July 2016, as amended from time to time by the Reserve Bank of India.
Key Regulatory Changes: After reviewing the prevailing market conditions, the following additional measures have been introduced:
1. Restriction on Non-Deliverable INR Derivatives
Authorised Dealers are not permitted to offer non-deliverable derivative contracts involving the Indian Rupee (INR) to either resident or non-resident users.
However, ADs may continue to provide deliverable foreign exchange derivative contracts to users for genuine hedging purposes, provided that the user does not simultaneously maintain any offsetting non-deliverable derivative position.
To ensure compliance, ADs may obtain relevant information or supporting documents from users as required.
2. Prohibition on Rebooking of Cancelled Contracts
If a foreign exchange derivative contract, whether deliverable or non-deliverable, is cancelled after the issuance of these directions, the user will not be allowed to rebook the same contract.
Authorised Dealers may request appropriate documentation or declarations from users to confirm adherence to this requirement.
3. Transactions with Related Parties Not Allowed
Authorised Dealers are prohibited from entering into foreign exchange derivative transactions with their related parties.
For this purpose, the term “related parties” will carry the same meaning as defined under:
- Indian Accounting Standard (Ind AS) 24 – Related Party Disclosures
- International Accounting Standard (IAS) 24 – Related Party Disclosures, or
- Any other equivalent accounting standards.
Effective Date: These instructions take effect immediately and will remain applicable until further review by the Reserve Bank of India.
Legal Basis: The directions have been issued under Sections 10(4), 11(1), and 11(2) of the Foreign Exchange Management Act, 1999, without affecting any approvals or permissions that may be required under other applicable laws.
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