The Reserve Bank of India today released Draft Directions on non-residents’ access to Interest Rate Derivative (IRD) market. Comments on the draft directions are invited from banks, market participants and other interested parties by December 31, 2018.

Feedback on the draft directions may be forwarded to:

The Chief General Manager, Reserve Bank of India
Financial Markets Regulation Department
1st Floor, Main Building
Shahid Bhagat Singh Marg,
Mumbai – 400001

Or by email with subject line “Feedback on draft directions on non-residents’ access to Interest Rate Derivative (IRD) market.”

Background

It was proposed in the Bi-monthly Monetary Policy Statement in April 2018 that non-residents shall be given access to the Rupee Interest Rate Derivative (IRD) market in India. The draft directions in this regard propose non-residents’ access to IRD market, allowing non-residents to hedge their Rupee interest rate risk flexibly using any available IRD instrument. Non-residents will also be permitted to participate specifically in the Overnight Indexed Swap (OIS) market for purposes other than hedging. The draft directions in this regard is being issued for public feedback.

Ajit Prasad
Assistant Adviser

Non-resident access to rupee interest rate derivatives: draft directions permit hedging and OIS participation; comments invited. Non-resident access to the Rupee Interest Rate Derivatives market is proposed, allowing offshore entities to hedge rupee interest rate risk using available IRD instruments and permitting participation in the Overnight Indexed Swap (OIS) market for purposes other than hedging; the draft directions are issued for public consultation with comments invited to the Reserve Bank of India's Financial Markets Regulation Department.