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

The Reserve Bank of India (RBI) on Monday issued draft directions to widen reporting obligations for Authorised Dealer Category-I (AD Cat-I) banks, requiring disclosure of overseas related-party foreign exchange derivative transactions involving the Indian rupee.

The central bank said AD Cat-I banks would be required to report all over-the-counter (OTC) foreign exchange derivative contracts involving the rupee undertaken globally by their related parties to the Trade Repository of the Clearing Corporation of India Ltd (CCIL).

Comments on the draft directions have been invited from market participants, stakeholders and other interested parties by March 9, 2026.

The RBI said the term “related party” would align with prevailing accounting standards, encompassing parent companies, subsidiaries and entities under common control, as well as key management personnel. Associate companies, however, would be excluded from the definition under the proposed framework.

The central bank has proposed a phased implementation. Within 12 months of the issuance of the directions, 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 would rise to 80 per cent after 18 months and 90 per cent after 24 months.

At present, under the Master Direction on Risk Management and Inter-Bank Dealings and the Master Direction on Rupee Interest Rate Derivatives (2025), AD Cat-I banks and market-makers are required to report their own OTC foreign exchange and interest rate derivative transactions, including those executed through overseas entities, to CCIL’s trade repository. The proposed framework would extend this reporting perimeter to include rupee-linked OTC foreign exchange derivatives executed globally by offshore related parties of Indian banks.

The directions would apply to all OTC foreign exchange derivative contracts involving the rupee, including those traded on electronic platforms, while excluding exchange-traded derivatives.

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

Banks would 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 working days thereafter. Reporting formats would be prescribed by CCIL with prior RBI approval.