RBI Proposes Draft Norms for Reporting Forex Derivative Transactions Involving the Rupee

The Reserve Bank of India (RBI) has released draft guidelines for banks to report foreign exchange derivative transactions involving the rupee by their global affiliates. This initiative aims to improve pricing decisions for market participants. The RBI has been working on increasing transparency in over-the-counter (OTC) markets for foreign exchange, interest rate, and credit derivatives.

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Currently, all OTC derivative transactions are reported to the trade repository of the Clearing Corporation of India Limited (CCIL) by market-makers. However, a lack of transparency persists due to many offshore rupee derivative transactions not being reported. This gap was partially addressed in October 2022 when standalone primary dealers were mandated to report all global rupee derivative transactions by their related parties.

Enhancing Transparency in Rupee Derivative Markets

In December 2025, Indian banks were also required to report all rupee interest rate derivative transactions conducted globally by their related parties. Continuing this effort, the RBI now proposes that all Authorised Dealer Category-I banks must report foreign exchange derivative transactions involving INR undertaken by their global affiliates.

The RBI stated that this increased transparency would facilitate better pricing decisions for market participants. According to the draft directions, Authorised Dealer Category-I banks will need to report all relevant elements of covered transactions. This includes details like notional value, counterparty name, maturity date, and currency specifications.

Seeking Feedback from Stakeholders

The central bank is seeking feedback on these draft directions from market participants, stakeholders, and other interested parties. Comments are invited until March 9. The RBI's initiative is part of its broader strategy to enhance transparency in the rupee derivative markets.

By requiring comprehensive reporting of foreign exchange derivative transactions involving the rupee, the RBI aims to provide market participants with meaningful information. This move is expected to lead to more informed pricing decisions and a more transparent market environment.

With inputs from PTI