RBI Proposes Simpler Forex Rules For Authorised Dealers, Seeks Feedback

New Delhi, Feb 18 (KNN) The Reserve Bank of India (RBI) on Tuesday released draft Directions on ‘Foreign Exchange Dealings of Authorised Persons’, proposing wider operational flexibility for authorised dealers and easing certain reporting requirements.

The central bank has invited comments from market participants and stakeholders on the draft framework by March 10, 2026.

Greater Flexibility for Authorised Dealers

According to the RBI, the regulatory framework governing facilities for Authorised Persons and inter-bank foreign exchange transactions has been reviewed and refined. 

The proposed changes seek to provide greater flexibility to authorised dealers in handling foreign exchange products and undertaking transactions related to hedging exposures, balance sheet management, market-making, and proprietary positions.

Authorised dealers may undertake permitted foreign exchange transactions with other authorised dealers for these purposes. The draft also allows borrowing and lending in foreign currency.

The RBI has proposed permitting authorised dealers to enter into non-deliverable derivative contracts (NDDCs) involving the rupee with other authorised dealers.

Use of Electronic Trading Platforms

Under the draft norms, authorised dealers may undertake foreign exchange derivative contracts and foreign currency interest rate derivative contracts on electronic trading platforms (ETPs) authorised by the RBI.

Transactions on overseas ETPs would also be allowed, subject to conditions. The ETP operator must be incorporated or established in a country that is a member of the Financial Action Task Force (FATF), among other safeguards.

Gold Hedging Provisions

The draft permits designated banks under the Gold Monetisation Scheme, 2015, as well as banks allowed to enter forward gold contracts with domestic constituents, to hedge gold price risk using exchange-traded and over-the-counter products in overseas markets.

However, while using option-based products, banks must ensure there is no net receipt of premium, either direct or implied.

Easing Reporting Norms

The RBI said it has updated the format for reporting net open position limits as part of its effort to simplify compliance.

The draft follows the announcement made in the central bank’s Statement on Developmental and Regulatory Policies dated February 6, 2026. 

The RBI said the proposed changes are part of its ongoing process of refining foreign exchange market regulations in line with evolving market needs and feedback.

(KNN Bureau)