RBI tightens oversight of offshore rupee trading with new FX reporting rules

Mumbai: In a bid to bring offshore rupee activity under its regulatory radar, the Reserve Bank of India (RBI) on Monday directed authorized bank dealers to report over-the-counter FX derivative contracts involving the rupee.

The reporting will cover both deliverable and non-deliverable contracts. A staggered rollout of the guidelines will begin from July 2027 and full compliance is required by July 2028.

The central bank has been cracking down on speculative trading in the offshore dollar/rupee market, which has led to a rally in the domestic market as well. In late March, the central bank directed banks to limit their net open positions to $100 million in an effort to curb volatility in the currency.

Transaction reporting through the latest guidelines will help the central bank monitor price discovery, expanding the scope of reporting obligations to include offshore market activity.

Although market feedback has highlighted operational complexity, particularly for Indian branches of foreign lenders, the RBI said the framework already provides adequate operational flexibility. This includes allowing offshore related entities to report independently and excluding small businesses under $1 million from mandatory disclosure.

Banks will have to report transaction-level details of covered rupee derivative contracts in CCIL’s trade repository, including information such as notional amount, counterparty, maturity, currency pair and contract specifications. Such reporting is expected to be done on the transaction date or within two business days.

Responding to other requests, the RBI softened its original compliance roadmap, opting for a staggered rollout starting from July 2027 instead of the earlier 12-month timeframe. The reporting threshold will gradually increase before full compliance is required by July 2028, giving banks more time to build systems and consolidate reporting across group entities.