The Reserve Bank of India (RBI), on April 01, 2026, issued revised directions under its A.P. (DIR Series) Circular No. 03, updating the framework on risk management and inter-bank dealings in foreign exchange markets. The circular, issued under the Foreign Exchange Management Act, 1999 (FEMA), follows a review of evolving market conditions and supplements earlier instructions and the Master Direction dated July 05, 2016.
The RBI has imposed key restrictions on Authorised Dealers (ADs): (i) prohibition on offering non-deliverable derivative contracts involving INR to both residents and non-residents, while allowing deliverable derivatives strictly for hedging without offsetting non-deliverable positions; (ii) prohibition on rebooking of any cancelled INR-linked derivative contracts (deliverable or non-deliverable) after issuance of the circular; and (iii) restriction on entering into INR derivative contracts with related parties, as defined under Ind AS 24 / IAS 24 or equivalent standards.
These directions are effective immediately and remain in force until further review. They aim to strengthen prudential controls, reduce speculative exposures, and ensure greater transparency and discipline in INR derivative markets, while safeguarding the integrity of the foreign exchange framework.
[Notification No. RBI/2026-27/04]
