RBI issues directions for OTC derivatives for authorised dealer Category 1 banks under FEMA

May 22, 2020 | by Avantis RegTech Legal Research Team


Finance & Taxation Compliance

The Reserve Bank of India (RBI) on May 18, 2020 issued circular specifying reporting platform for Over the counter Derivatives. The RBI has permitted banks in India having an Authorised Dealer Category-1 license under Foreign Exchange Management Act, 1999, and operating IBUs have been permitted, with effect from June 1, 2020, to offer non-deliverable derivative contracts (NDDCs) involving the Rupee, or otherwise, to persons not resident in India. Banks can undertake such transactions through their IBUs or through their branches in India or through their foreign branches

The Reserve Bank of India has mandated that all over the counter foreign exchange, interest rate and credit derivative transactions both inter-bank and client, will be reported to Clearing corporation’s trade reporting platform. Accordingly, it has been decided that IBUs shall report all Over to Counter foreign exchange, interest rate and credit derivative transactions - both interbank and client transactions - undertaken by them to Clearing Corporation of India Limited (CCIL) reporting platform with effect from June 01, 2020. Additionally, all matured and outstanding transactions as on May 31, 2020, shall be reported by July 31, 2020.

All foreign exchange non-deliverable derivative contracts undertaken by banks in India through their IBUs shall be reported to CCIL reporting platform with effect from June 01, 2020.

[Notification No. FMRD.FMID.26/02.05.002/2019-20]


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