The Reserve Bank of India has withdrawn the instructions issued on 1 April 2026 on Risk Management and Inter-Bank Dealings and introduced a prohibition on authorised dealers entering into any foreign exchange derivative contract involving INR with their related parties. Only two carve-outs apply: cancellation and rollover of existing contracts, and back-to-back transactions undertaken with non-related non-resident users in line with the Master Direction on Risk Management and Inter-Bank Dealings. “Related parties” follows the definition in Indian Accounting Standard 24 or International Accounting Standard 24 (or equivalent), and the revised instructions apply with immediate effect.
Reserve Bank of India 2026-04-20
Reserve Bank of India withdraws prior guidance and restricts authorised dealers from INR FX derivatives with related parties
The Reserve Bank of India has withdrawn its 1 April 2026 instructions on Risk Management and Inter-Bank Dealings and now prohibits authorised dealers from entering into any foreign exchange derivative contract involving INR with related parties. Limited carve-outs apply for cancellation and rollover of existing contracts and for back-to-back transactions with non-related non-resident users, with “related parties” defined under Indian Accounting Standard 24 or International Accounting Standard 24, and the revised instructions taking immediate effect.