India's RBI bars banks from offering rupee non-deliverable forwards and rebooking derivatives
Change
India's RBI prohibited banks and authorised dealers from offering non-deliverable forward contracts involving the rupee to resident or non-resident users, barred rebooking of any foreign-exchange derivative contracts, and forbade such contracts with related parties effective immediately until further review.
Why it matters
Offshore hedging and arbitrage channels between onshore and offshore rupee markets are now blocked, removing a common route banks and corporate clients used to offset onshore position limits. Treasury and trading operations will no longer be able to neutralise large rupee exposures through NDFs or internal related-party rebookings, increasing operational constraints on hedging strategies.
Implications
- • Authorised dealer banks' foreign-exchange trading desks must stop structuring or selling new rupee non-deliverable forward contracts and must cease rebooking trades with related parties immediately or be in breach of RBI rules.
- • Authorised dealer banks' risk and compliance teams must ensure end-of-day net open rupee positions in the onshore deliverable market do not exceed $100 million from April 10, 2026 or face supervisory action.
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