RBI released a draft of new rules made on ‘Rupee Interest Rate Derivatives’

The Reserve Bank of India (RBI) has issued a draft in the rules related to the rupee interest rate derivatives (IRD) on Monday. Its purpose is to update the existing rules according to the changing financial environment and the increasing participation of foreign investors.

Preparation to give a new look to old rules

The current rules related to IRD were last changed in June 2019. But now new products have come in the market and the participation of foreign companies has also increased considerably. In such a situation, the RBI has fully reviewed the rules and has prepared a new draft, which is named Draft Master Direction, Reserve Bank of India (Rupee Interest Rate DERIVATIS) Directions, 2025.

What are IRD i.e. interest rate derivatives?

These are financial contracts whose value depends on the interest rates, interest related to interest or interest rate index. They are usually used to prevent risk and earn profits in the market.

Now foreign companies will also get big relief

Under the new draft, now foreign companies will be able to do transactions in IRD through their Central Treasury or Group Anti. However, the condition is that the institution which will deal with foreign investors should be properly authorized, so that there is no disturbance.

Reporting mess will also be reduced

The RBI has taken another big step towards making the rules easier. Now the reporting process related to IRD transaction will be simplified, so that the burden of compliance on people associated with the market can be reduced. Also, it is proposed to report the IRD transactions done outside India, so that transparency remains in the entire system.

Last date to send suggestions: 7 July 2025

The RBI has urged all the market participants associated with banks, financial institutions and IRD to send their suggestions and feedback on this draft by 7 July 2025.

Why is this change important?

This step shows that India’s central bank is serious towards developing the financial market according to global standards. This will not only promote foreign investment, but Indian companies will also get better risk management opportunities.

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