Reserve Bank of India (RBI) partially eases rupee non-deliverable forward (NDF) curbs on banks

Key facts

• The Reserve Bank of India (RBI) has partially rolled back measures announced on April 1 that barred banks from offering rupee-linked non-deliverable forwards (NDF).
• Under the revised rules, banks are permitted to undertake certain related-party transactions, including the cancellation and rollover of existing contracts and deals via the back-to-back route.
• Banks continue to be barred from undertaking all foreign-exchange derivative transactions with related parties.
• The $100 million cap on net open positions in the onshore deliverable market, introduced on March 27, remains in place.
• The initial curbs were implemented following heightened volatility in foreign-exchange markets in March due to the West Asia conflict, which led to a rupee depreciation of more than 4 per cent against the dollar.
• Sanjay Malhotra is the Governor of the RBI.