RBI Proposes Mandatory Reporting Of Offshore Rupee OTC Derivatives

New Delhi, Feb 17 (KNN) The Reserve Bank of India (RBI) has released draft directions requiring banks to report offshore over-the-counter (OTC) foreign exchange derivative transactions involving the rupee undertaken by their related parties. 

Stakeholders and market participants have been asked to submit feedback on the draft by March 9, 2026.

The move is aimed at improving transparency in derivative markets, particularly where offshore rupee contracts currently remain outside the reporting framework.

At present, market-makers report OTC foreign exchange, interest rate and credit derivative transactions to the trade repository of the Clearing Corporation of India Limited (CCIL). 

However, the RBI noted that several offshore rupee derivative deals are not captured, limiting transparency and affecting price discovery. The proposed framework seeks to address this gap and support better pricing decisions for market participants.

Reporting Requirements for AD Category-I Banks

Under the draft directions, Authorised Dealer Category-I (AD Cat-I) banks will be required to report all OTC foreign exchange derivative contracts involving the Indian Rupee undertaken globally by their related parties to CCIL’s trade repository. The term ‘related party’ will follow definitions under Ind AS 24 or IAS 24, excluding associates.

Banks must report key transaction details such as notional value, counterparty name, maturity date and currency specifications. 

Transactions executed on anonymous trading platforms and cleared through a central counterparty may report the central counterparty as the counterparty. 

Reporting must be completed preferably on the trade date and no later than two working days thereafter.

Certain exemptions have been provided. Banks are not required to report back-to-back transactions or trades between related parties and other AD Cat-I banks in India. They may also exclude contracts with a notional value of up to USD 1 million or its equivalent.

Phased Compliance Framework

The RBI has proposed a phased implementation to ensure gradual alignment. Within 12 months of the directions coming into force, at least 70 per cent of the notional value of eligible offshore rupee derivative contracts must be reported. 

This threshold will rise to 80 per cent after 18 months and 90 per cent after 24 months.

(KNN Bureau)