RBI plans mandatory reporting of offshore related-party rupee FX contracts | Finance News

The Reserve Bank of India (RBI) on Monday issued draft instructions mandating disclosure of foreign related party foreign exchange derivative transactions related to Indian rupee to extend reporting obligations of Authorized Dealer Category-I (AD Cat-I) banks.

AD Cat-I banks will be required to report all over-the-counter (OTC) foreign exchange derivative contracts involving rupee undertaken by related parties globally to Clearing Corporation of India Ltd’s (CCIL) Trading Pool, the central bank said.

Comments on the draft instructions were requested from market participants, stakeholders and other interested parties by 9 March 2026.

The term “related party” will be in accordance with applicable accounting standards covering parent companies, subsidiaries and entities under common control and key management personnel, the RBI said. However, subsidiaries will be excluded from the definition under the proposed framework.

The central bank proposed a phased implementation. Within 12 months of the publication of the instructions, banks must ensure that reported transactions represent at least 70 per cent of the notional value of all covered rupee derivatives undertaken by related parties. This threshold will increase to 80 percent after 18 months and to 90 percent after 24 months.

Currently, under the Principal Directive on Risk Management and Interbank Relations and the Principal Directive on Rupee Interest Rate Derivatives (2025), AD Cat-I banks and market makers are required to report their OTC foreign exchange and interest rate derivative transactions, including those carried out through offshore entities, to CCIL’s trading repository. The proposed framework will expand this reporting scope to include rupee-linked OTC currency derivatives held globally by offshore related parties of Indian banks.

The instructions will apply to all OTC foreign exchange derivative contracts involving the rupee, including those traded on electronic platforms, but exchange-traded derivatives will be excluded.

The draft norms will exempt back-to-back transactions as defined in the existing risk management guidelines and trades by related parties with other AD Cat-I banks in India. Banks may also choose not to report contracts with a notional value of up to $1 million or equivalent.

Banks will be required to report transaction details, including notional value, counterparty name, maturity, currency and other specifications, preferably on the transaction date and no later than two business days after the transaction. Reporting formats will be determined by CCIL with prior approval from RBI.