The Reserve Bank of India has withdrawn its earlier circular dated April 1, 2026, and introduced revised guidelines restricting foreign exchange derivative contracts involving the Indian rupee with related parties.
In a fresh communication under its Risk Management and Inter-Bank Dealings framework, the central bank said authorised dealers will no longer be permitted to undertake forex derivative contracts involving INR with related parties, except under limited conditions.
The RBI clarified that such transactions will only be allowed in two specific cases: cancellation or rollover of existing contracts, and transactions carried out with non-related non-resident users on a back-to-back basis, in line with the Master Direction on Risk Management and Inter-Bank Dealings.
The regulator also defined “related parties” in accordance with applicable accounting standards, including Ind AS 24 and IAS 24, covering related party disclosures and equivalent frameworks.
The revised instructions have come into effect immediately, the RBI said, adding that the directions are issued under provisions of the Foreign Exchange Management Act (FEMA), 1999.
The move is seen as part of the central bank’s efforts to strengthen oversight and risk controls in forex derivative markets, particularly in transactions involving related entities.
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