The Reserve Bank of India has tightened rules for foreign exchange derivatives involving the Indian rupee, barring authorised dealers from allowing users to rebook contracts canceled after the directions were issued. Users may continue to roll over contracts at maturity, subject to the central bank’s Master Direction. The measure reinstates a rebooking restriction introduced in April 2026 and subsequently withdrawn. The RBI also reduced from USD 100 million to USD 5 million each of the limits for positions that users may take without establishing the existence of an underlying exposure. The lower thresholds apply to contracted exposure hedges across all authorised dealers and, separately, to combined long or short positions across all INR currency pairs on recognized stock exchanges. For an INR derivative used to hedge a contracted exposure, dealers must obtain an undertaking that the exposure has not been hedged elsewhere, including details of any portions booked with other dealers. Authorised dealers are responsible for verifying underlying exposures and must retain the necessary documentation for at least two years. The directions took immediate effect.
Reserve Bank of India cuts INR derivatives position limits without proof of underlying exposure to USD 5 million and bars rebooking
The Reserve Bank of India has barred rebooking of canceled INR foreign exchange derivatives while continuing to permit rollovers at maturity. It also cut from USD 100 million to USD 5 million the relevant position limits available without proof of underlying exposure. Dealers must obtain undertakings against duplicate hedging, verify exposures and retain supporting documents for at least two years.