Rupee Interest Rate Derivatives Regulations 2025

Current Context : The Reserve Bank of India released draft Master Directions on Rupee Interest Rate Derivatives, updating guidelines last revised in 2019 to align with market evolution and enhance non‑resident participation.

ABOUT INTEREST RATE DERIVATIVES

• Definition: Financial contracts whose value is derived from underlying rupee‑denominated interest rates or indices.
• Common Instruments:
  • Swaps: Exchange fixed and floating rate cash flows.
  • Futures: Standardised contracts to buy/sell debt instruments at a future date.
  • Options (Caps/Floors/Collars): Rights to cap or floor interest payments within agreed bands.
• Key Draft Provisions:
  • Non‑Resident Access: Permits non‑residents to trade via their central treasuries or group entities with proper authorisation.
  • Reporting & Authorisation: Mandates trade reporting, user authorisations, and risk‑management safeguards.