RBI Draft Norms for Rupee Interest Rate Derivatives
Why in the news
RBI released draft rules to refresh the rupee interest rate derivatives framework, which dates from June 2019.
Key facts
- Since 2019 the market saw new instruments, higher non-resident participation and more refined hedging by domestic entities.
- IRDs are contracts deriving value from rupee rates, prices of rate-linked instruments or rate indices; used to hedge or speculate.
| Objective | Purpose |
|---|---|
| Market alignment | Match current practices and instruments |
| Non-resident participation | Clearer rules and access for foreign investors |
| Risk management | Handle counterparty, liquidity, operational risks |
| Transparency | Record, report and supervise all trades |
Exam angle
- Draft date: June 17, 2025; earlier revision: June 2019.