Reserve Bank of India, in the Statement on Developmental and Regulatory Policies announced on Friday October 4, 2019, announced that it would take steps to develop offshore Rupee Market based on the recommendation of Task Force on Offshore Rupee Markets. The Task Force chaired by Smt. Usha Thorat had recommended several important measures to develop offshore Rupee Market like 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 allowing rupee derivatives (with settlement in foreign currency) to be traded in International Financial Services Centres (IFSCs). The above measures are taken to incentivize non-residents to access the onshore foreign exchange market, as the Central Bank tries to deepen the local market.
The Statement on Developmental and Regulatory Policies announced on Friday October 4, 2019, further said that the directions for implementing the above two recommendations will be issued in consultation with the Central Government and other regulators.
At present GIFT City-SEZ at Gandhinagar, Gujarat is the only centre which is designated as International Financial Services Centre (IFSC). The RBI’s plan also follows the increasing influence of the non-deliverable forwards market on local trading. RBI Governor Shaktikanta Das in his press statement said that “Trading in the onshore market has been shrinking at the expense of offshore rupee market”. The London has surpassed India’s financial capital Mumbai to become the top centre for trading Rupee, according to press reports.