The Reserve Bank of India has allowed Authorised Dealer (AD) Category-I banks operating International Financial Services Centre (IFSC) Banking Units (IBUs) to offer non-deliverable derivative contracts (NDDCs) involving Indian Rupee (INR) to resident non-retail users for hedging.
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The Central bank said such transactions shall be cash settled in INR. It also gave the flexibility of cash settlement of NDDCs transactions between two AD Category-I banks, and between an AD Category-I bank and a person residing outside India in INR or any foreign currency.
The aforementioned measures are aimed at developing the onshore INR NDDC market and providing residents the flexibility to efficiently design their hedging programmes.