The Reserve Bank of India (RBI) has released a Draft Circular dated December 9, 2025, proposing enhanced transparency measures for foreign exchange (FX) transactions undertaken by retail users.
In January 2024, Authorised Dealers (ADs) were mandated to disclose the mid-market mark / bid-ask price for all foreign exchange derivative and foreign currency interest rate derivative contracts prior to execution, and to include the same in deal confirmations or term sheets.
As the next step in strengthening transparency in the FX market, RBI has proposed that ADs must also disclose complete transaction cost details for the following retail FX products:
• Foreign exchange cash
• Foreign exchange tom
• Foreign exchange spot
This disclosure will cover all components of transaction cost, including:
• Remittance / sending and receiving fees (including intermediary charges)
• Applied foreign exchange rate
• Currency conversion charges
These details must be provided before entering into the contract and must be included in the final deal confirmation.
Reference to Master Direction
The proposal refers to the Master Direction – Risk Management and Inter-Bank Dealings (July 5, 2016), which permits ADs to offer FX cash, FX tom, FX spot, FX derivative contracts, and foreign currency interest rate derivative contracts to retail and non-retail users.
Effective Date
The new instructions will come into force three months from the date of issuance of the final circular.
Definitions
For this draft circular, the terms “retail user” and “Authorised Dealer” carry the same meaning as defined in the Master Direction.
Statutory Basis
These directions are issued under Section 45W of the Reserve Bank of India Act, 1934 and Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, and are applicable without prejudice to other legal requirements.
