The Reserve Bank of India added the following section to Part C (Inter-Bank Foreign Exchange Dealings) of the Master Direction- Risk Management and Inter-Bank Dealings.
“Transactions with person residents outside India, through their foreign branches and subsidiaries may also be undertaken beyond onshore market hours.”
The RBI notification issued by RBI on Monday (January 6) in this regard allowed the Authorised dealers to undertake customer (person resident in India and persons resident outside India) and inter-bank transactions beyond onshore market hours. The notification clarified that “the transactions with person resident outside India, through their foreign branches and subsidiaries may also be undertaken beyond onshore market hours.”
The Task Force on Offshore Rupee Markets headed by the Chairperson Smt. Usha Thorat) in its report submitted to RBI on July 30, 2019, had recommended following two measures to incentivize non-residents to access the onshore foreign exchange market.
1) Allowing domestic banks to freely offer foreign exchange prices to non-residents at all times, out of their Indian books, either by a domestic sales team or through their overseas branches; and
2) Allowing rupee derivatives (with settlement in foreign currency) to be traded in International Financial Services Centres (IFSCs).
The above two important recommendations are at this time fully approved and accordingly issued directions to the Authorised Dealers for implementing the same.
