RBI releases draft regulations on rupee interest rate derivatives

The Reserve Bank of India on Monday issued draft regulations for Rupee Interest Rate Derivatives to align the extant regulatory framework with the market and other related developments.
The extant regulatory framework for Rupee Interest Rate Derivatives (IRD) was issued in June 2019.
Since then, there have been several new developments in the market, including the emergence of new products as well as the participation of non-residents in the market.
"Accordingly, a comprehensive review of the IRD Directions was undertaken, and the draft directions have been prepared to align it with the market and other related developments," RBI said while issuing the 'Draft Master Direction -Reserve Bank of India (Rupee Interest Rate Derivatives) Directions, 2025'.
'Interest Rate Derivative' means a financial derivative contract whose value is derived from one or more rupee interest rate, prices of rupee interest rate instruments, or rupee interest rate indices.
According to the draft, a non-resident may undertake IRD transactions through its central treasury or its group entity, where applicable.
"In case of such transactions, the market-maker shall ensure that the central treasury / group entity is appropriately authorised by the user to deal for and on its behalf," said the draft on which the RBI has sought comments from banks, market participants and other interested parties by July 7, 2025.
The reporting requirements under the draft directions have also been rationalised to reduce compliance burden.
Separately, a requirement for reporting of IRD transactions undertaken globally is proposed to be introduced with a view to enhancing transparency in the Rupee IRD market.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

The Hindu

9 hours ago

• The Hindu

Banks must act with social commitment, says MP

MP for Mysuru Yaduveer Krishnadatta Chamaraja Wadiyar on Saturday said banks should not simply chase profits but also operate with a strong sense of social responsibility. Presiding over the District-Level Advisory and Progress Review Committee meeting in Madikeri, Mr. Yaduveer called upon banks to extend lending support to farmers, small and medium enterprises, traders, and cottage industries. 'Inclusive development is the need of the hour, and banks must play an important role in ensuring it,' he said. He urged banks to strictly adhere to Central government guidelines and provide greater assistance to priority sectors such as agriculture, horticulture, animal husbandry, and fisheries. 'Banks should function as partners in realising Prime Minister Narendra Modi's vision of inclusive and sustainable development,' Mr. Yaduveer said. Stressing on the importance of language and communication, he said staff of nationalised banks should learn Kannada to connect better with local communities. 'It not only helps in addressing grievances efficiently but also strengthens public trust,' he added. RBI Assistant General Manager Suraj said that an online Kannada learning initiative for bank employees has already been launched. Presenting the overview of bank performance in the district during 2024-25, Lead Bank Manager Gangadhar Nayak said banks achieved 99% of the agricultural loan disbursement target, 97% in small-scale industries, 100% in educational loans, 74% in the housing sector, 104% in other priority sectors, 98% overall in the priority sector, and 117% in non-priority sector lending. The Annual District Credit Plan target for the year 2025–26 has been pegged at ₹7,680.10 crore. Sector-wise allocations include ₹3,477.86 crore for crop loans, ₹1,388.42 crore for small and medium industries, ₹33.27 crore for educational loans, ₹59.46 crore for the housing sector, and ₹115.53 crore for other priority sectors — totalling ₹5,074.54 crore for all priority sectors. A sum of ₹2,606.56 crore has been earmarked for non-priority sectors, he said. Zilla Panchayat Chief Executive Officer Anand Prakash Meena, Additional Deputy Commissioner R. Aishwarya, and officials from various departments and corporations attended the meeting.

India Gazette

9 hours ago

• India Gazette

LIC Housing Finance reduces interest rate in line with recent RBI repo rate cut

New Delhi [India], June 21 (ANI): LIC Housing Finance has reduced its rate of interest on new home loans by 50 basis points, in line with the similar degree of repo rate cut by yje Reserve Bank of India (RBI). With this revision, interest rates on new home loan sanctions will now start from 7.50 per cent, effective June 19, 2025, coinciding with the company's 36th Foundation Day, it said in a statement Saturday. This move by LIC Housing Finance is aimed at passing on the benefit to new home loan customers to encourage home ownership and improve affordability. The recent frontloaded repo rate cut by the RBI was understandably aimed at boosting economy, which has relatively moderated. The policy rate cut and the subsequent decline in interest rates by banks will create demand for fresh credit, giving fresh life to the economy. After a total of 100 basis point repo rate reduction since February 2025, the scope for more rate cuts is limited, RBI Governor Sanjay Malhotra had hinted after the latest monetary policy meeting. Tribhuwan Adhikari, MD and CEO, LIC Housing Finance said 'As we mark our 36th Foundation Day, we remain committed to making home ownership more accessible. The rate cut is a continuation of our effort to align with RBI's policy direction and pass on the benefits to our customers.' 'We are confident this move will provide an added boost to housing demand, especially in the affordable and mid-income segments, where aspirations of owning a home are closely tied to interest rate dynamics,' the MD and CEO added. LIC Housing Finance Ltd is a leading housing finance company having networks of offices across India and a representative office in Dubai. In addition, the Company also distributes its products through branches of its subsidiary LIC HFL Financial Services Ltd. LIC Housing Finance Ltd was promoted by Life Insurance Corporation in 1989, and a public issue was made in 1994. (ANI)

India.com

10 hours ago

• India.com

ICICI-HDFC Merger Almost Happened? Deepak Parekh Shares Surprising Detail

New Delhi: In a surprising revelation, former HDFC chairman Deepak Parekh shared that ex-ICICI Bank CEO Chanda Kochhar had once suggested a merger between ICICI and HDFC—long before HDFC's own reverse merger with HDFC Bank took place. The idea, though never pursued sheds light on what could have been one of the biggest mergers in India's banking history. In a YouTube video, former HDFC chairman Deepak Parekh recalled a conversation with former ICICI Bank MD & CEO Chanda Kochhar. He said, 'I remember you talking to me once…you said that ICICI started HDFC. 'Why don't you come back home?' That was your offer.' Parekh shared that he had politely declined the idea, saying, 'It won't be fair or proper with our name and the bank and all.' He also noted that the HDFC-HDFC Bank reverse merger, which was completed in July 2023, was largely driven by regulatory pressures. Former HDFC chairman Deepak Parekh revealed that the merger with HDFC Bank, completed in July 2023, was largely driven by regulatory pressure. The Reserve Bank of India had classified large NBFCs like HDFC—those with assets exceeding Rs 5 lakh crore as systemically important, crossing the Rs 50,000-crore threshold. Talking about the RBI's role, Parekh said, 'The RBI supported us and they pushed us into it to some extent and they helped us…there were no concessions, no relief, no time, nothing but they helped us to go through the process and get the approval.' Speaking about the process, Parekh said, "RBI supported us and they pushed us into it to some extent and they helped us." However, he made it clear there were "no concessions, no relief, no time, nothing." Reflecting on the day the merger was finalized, Parekh described it as "a sad day and a happy day." He added, "It's good for the institution." Deepak Parekh shared that the RBI played a key role in the HDFC-HDFC Bank merger. "RBI supported us and they pushed us into it to some extent and they helped us," he said. However, he clarified that the process wasn't made easier in any way, adding there were "no concessions, no relief, no time, nothing." Reflecting on the day the merger was completed, Parekh called it "a sad day and a happy day," and added, "It's good for the institution."