The Reserve Bank of India today released the Draft Reserve Bank of India (Bond Forwards) Directions, 2023. Comments on the draft directions are invited from banks, market participants, investors and other interested parties by January 25, 2024.

Feedback on the draft directions may be forwarded to:

The Chief General Manager
Reserve Bank of India
Financial Markets Regulation Department
9th Floor, Central Office Building
Shahid Bhagat Singh Marg, Fort
Mumbai – 400001

Or by email with subject line “Feedback on Draft Directions on Bond Forwards”.

Background

The Reserve Bank of India has been expanding the suite of interest rate derivative products available to market participants to manage interest rate risks. The Reserve Bank has received suggestions on the need to introduce bond forwards in government securities. The draft directions on contracts to deliver government securities on a forward basis seek to enable market participants, especially long-term investors, to manage their cash flows and interest rate risk.

(Yogesh Dayal)     
Chief General Manager

Bond forwards introduced to permit forward delivery of government securities, enabling cash flow hedging and interest rate risk management. Release of Draft Directions establishing a regulatory framework for bond forwards to permit contracts that deliver government securities on a forward basis, expanding market instruments to help banks, long term investors and other market participants hedge cash flow mismatches and manage interest rate risk; and inviting written comments through specified channels as part of a formal consultation process.