The Reserve Bank of India (RBI) on June 06, 2023, notified regarding the Risk Management and Inter-Bank Dealings - Non-deliverable derivative contracts (NDDCs).
AD Cat-I banks operating International Financial Services Centre (IFSC) Banking Units (IBUs) are permitted to offer non-deliverable derivative contracts (NDDCs) to persons resident outside India. Such derivatives are cash-settled in foreign currency. With a view to developing the onshore INR NDDC market and providing residents with the flexibility to efficiently design their hedging programs, it has been decided to permit:
o AD Cat-I banks operating IBUs to offer NDDCs involving INR to resident non-retail users for the purpose of hedging. Such transactions shall be cash settled in INR; and
o The flexibility of cash settlement of NDDCs transactions between two AD Cat-I banks, and between an AD Cat-I bank and a person resident outside India in INR or any foreign currency.
Accordingly, the amendments being made to the Master Direction – Risk Management and Inter-Bank Dealings dated July 5, 2016, as amended from time to time, are placed in Annex herewith.
[Notification No. RBI/2023-24/36 A. P. (DIR Series) Circular No. 05]
