INDIA · WORLD & POLITICS
RBI draft loosens FX dealing and reporting rules
Economic Times
17 Feb · 11:48 PM
Change
The Reserve Bank of India issued draft directions to expand permitted foreign-exchange transactions and ease reporting obligations for authorised persons, with public comments open until March 10.
Why it matters
The draft would allow authorised dealers to transact with other authorised dealers for permitted FX activity covering hedging, balance-sheet management, market-making, and proprietary positions. It also proposes allowing rupee non-deliverable derivative contracts (NDDCs) between authorised dealers, expanding the onshore set of counterparties/instruments. Separately, designated banks under the Gold Monetisation Scheme and banks permitted to offer forward gold contracts domestically would be allowed to hedge gold price risk using exchange-traded and OTC products in overseas markets. The RBI also proposes easing reporting obligations, which would alter ongoing compliance processes and the granularity/timeliness of regulatory reporting after final directions are issued. The immediate timing constraint is the consultation deadline of March 10, after which final rules could be issued on the reviewed framework.
Implications
- • Broader inter-dealer FX activity scope, including proprietary positions
- • Rupee NDDCs between authorised dealers expand permissible derivatives set
- • Overseas gold hedging permitted for eligible banks under GMS/forward gold
- • Reduced FX reporting obligations change compliance workload and data capture
Who is affected
- • Authorised dealer banks (AD Category-I)
- • Standalone primary dealers active in FX markets
- • Banks designated under the Gold Monetisation Scheme, 2015
- • Banks permitted to offer forward gold contracts to India-based constituents
Source
Read original → Economic Times
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