What changed

RBI has imposed three new restrictions on Authorised Dealers handling INR-linked derivatives. First, non-deliverable derivative contracts involving INR are prohibited for both resident and non-resident users. Second, rebooking of any cancelled INR derivatives (deliverable or non-deliverable) is barred effective from the circular's issuance date. Third, Authorised Dealers cannot enter INR derivatives with related parties as defined under Ind AS 24 or IAS 24.

Authorised Dealers must immediately cease offering INR non-deliverable derivatives, prevent users from rebooking cancelled INR contracts, and block related party transactions in INR derivatives. Dealers may request information from users to verify compliance with the offsetting position restriction. These restrictions apply with immediate effect until further notice and are issued under FEMA 1999 Sections 10(4), 11(1), and 11(2).

What to do next

Cease offering non-deliverable derivative contracts involving INR to any users immediately
Implement controls to prevent users from rebooking cancelled INR derivatives from the issuance date
Block all INR derivatives transactions with related parties as defined under Ind AS 24 or IAS 24
Update user onboarding and transaction monitoring systems to enforce the offsetting position restriction on deliverable derivatives

Penalties

Non-compliance may attract action under FEMA 1999 including penalties under Section 11

Source document (simplified)

Notifications

April 01, 2026

To,

All Authorised Dealers

Madam/Sir,

Risk Management and Inter-Bank Dealings

Attention of Authorised Dealers is invited to the A.P. (DIR Series) Circular No. 24 dated March 27, 2026 and the Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended from time to time.

On a review of evolving market conditions, it has been further decided that:

a) Authorised Dealers shall not offer non-deliverable derivative contracts involving INR to resident or non-resident users. Authorised Dealers may, however, continue to offer deliverable foreign exchange derivative contracts to users to meet their hedging requirements provided that the user does not undertake offsetting non-deliverable derivative positions. For this purpose, the Authorised Dealers may call for such information / documents from users as they deem necessary for complying with the requirements;

b) Authorised Dealers shall not permit a user to rebook any foreign exchange derivative contract involving INR, whether deliverable or non-deliverable, which is cancelled after the date of issuance of these instructions. For this purpose, the Authorised Dealers may call for such information / documents from users as they deem necessary for complying with the requirements; and

c) Authorised Dealers shall not undertake any foreign exchange derivative contract involving INR with their related parties. ‘Related parties’ shall have the same meaning as assigned to it under the Indian Accounting Standard (Ind AS) 24 – Related Party Disclosures or International Accounting Standard (IAS) 24 – Related Party Disclosures or any other equivalent accounting standards.

These instructions shall be applicable with immediate effect, until further review.
The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Dimple Bhandia)
Chief General Manager | | RBI/2026-27/04
A.P. (DIR Series) Circular No. 03

April 01, 2026

To,

All Authorised Dealers

Madam/Sir,

Risk Management and Inter-Bank Dealings

Attention of Authorised Dealers is invited to the A.P. (DIR Series) Circular No. 24 dated March 27, 2026 and the Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended from time to time.

On a review of evolving market conditions, it has been further decided that:

a) Authorised Dealers shall not offer non-deliverable derivative contracts involving INR to resident or non-resident users. Authorised Dealers may, however, continue to offer deliverable foreign exchange derivative contracts to users to meet their hedging requirements provided that the user does not undertake offsetting non-deliverable derivative positions. For this purpose, the Authorised Dealers may call for such information / documents from users as they deem necessary for complying with the requirements;

b) Authorised Dealers shall not permit a user to rebook any foreign exchange derivative contract involving INR, whether deliverable or non-deliverable, which is cancelled after the date of issuance of these instructions. For this purpose, the Authorised Dealers may call for such information / documents from users as they deem necessary for complying with the requirements; and

c) Authorised Dealers shall not undertake any foreign exchange derivative contract involving INR with their related parties. ‘Related parties’ shall have the same meaning as assigned to it under the Indian Accounting Standard (Ind AS) 24 – Related Party Disclosures or International Accounting Standard (IAS) 24 – Related Party Disclosures or any other equivalent accounting standards.

These instructions shall be applicable with immediate effect, until further review.
The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Dimple Bhandia)
Chief General Manager |
| RBI/2026-27/04
A.P. (DIR Series) Circular No. 03

April 01, 2026

To,

All Authorised Dealers

Madam/Sir,

Risk Management and Inter-Bank Dealings

Attention of Authorised Dealers is invited to the A.P. (DIR Series) Circular No. 24 dated March 27, 2026 and the Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended from time to time.

On a review of evolving market conditions, it has been further decided that:

a) Authorised Dealers shall not offer non-deliverable derivative contracts involving INR to resident or non-resident users. Authorised Dealers may, however, continue to offer deliverable foreign exchange derivative contracts to users to meet their hedging requirements provided that the user does not undertake offsetting non-deliverable derivative positions. For this purpose, the Authorised Dealers may call for such information / documents from users as they deem necessary for complying with the requirements;

b) Authorised Dealers shall not permit a user to rebook any foreign exchange derivative contract involving INR, whether deliverable or non-deliverable, which is cancelled after the date of issuance of these instructions. For this purpose, the Authorised Dealers may call for such information / documents from users as they deem necessary for complying with the requirements; and

c) Authorised Dealers shall not undertake any foreign exchange derivative contract involving INR with their related parties. ‘Related parties’ shall have the same meaning as assigned to it under the Indian Accounting Standard (Ind AS) 24 – Related Party Disclosures or International Accounting Standard (IAS) 24 – Related Party Disclosures or any other equivalent accounting standards.

These instructions shall be applicable with immediate effect, until further review.
The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Dimple Bhandia)
Chief General Manager | |