RBI Targets Hidden Offshore Trades, Banks Must Report All Rupee FX Derivatives Globally

Mumbai: The RBI on Monday issued draft norms for banks to report foreign exchange derivative transactions involving rupee undertaken by their related parties globally, a move aimed at enabling better pricing decisions by market participants.

The Reserve Bank said it has been taking several measures to enhance transparency in the markets for over-the-counter (OTC) foreign exchange, interest rate and credit derivatives. As part of these measures, all transactions in OTC derivatives are reported to the trade repository (TR) of the Clearing Corporation of India Limited (CCIL) by market-makers.

There is, however, an element of non-transparency because the sizeable number of offshore rupee derivative transactions are not reported, and therefore, not available to market participants. This shortcoming was partly addressed when standalone primary dealers were required to report all rupee derivative transactions undertaken globally by their related parties in October 2022.

Further, banks in India were required to report all rupee interest rate derivative transactions undertaken globally by their related parties in December 2025. "Carrying this process of enhancing transparency of rupee derivative markets, it is now proposed that all Authorised Dealer Categoryâ?"I banks shall report foreign exchange derivative transactions involving INR undertaken by their related parties globally," the RBI said.

The resultant transparency shall enable better pricing decisions by market participants, it said. According to the draft dirctions, Authorised Dealer Category-I banks will report all elements of covered transactions which are relevant to provide meaningful information about the transaction. This will include, but not be limited to, the notional value, name of the counterparty, maturity date, currency, specifications, as applicable to the transaction, it added. The central bank has invited comments on the draft directions from market participants, stakeholders and other interested parties by March 9. 

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