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BIZ-RBI-NRI-IRD


PTI mumbai India
Updated: 05-12-2018 19:51 IST

The Reserve Bank of India (RBI)

Wednesday issued draft guidelines on non-residents.

participation in the interest rate derivative (IRD) market.

The draft norms have proposed non-resident Indians'

(NRIs) access to the IRD market, allowing them to hedge their

rupee interest rate risk flexibly using any available IRD

instrument, RBI said in a release.

"Non-residents will also be permitted to participate

specifically in the overnight indexed swap (OIS) market for

purposes other than hedging," it said.

The central bank has sought comments on the draft

guidelines from banks, market participants and other

interested parties by December 31.

In its April 2018 policy, the RBI had proposed that

NRIs should be given access to the rupee IRD market.

The apex bank had said while rupee interest rate swap

(IRS) market is the most liquid among interest rate derivative

markets, it still lacks depth to enable large banks to manage

risks.

Thin participation and consequent absence of

divergence of views result in pricing inefficiencies, which

further discourages participation, it had said.

There is an active market for rupee interest rate

swaps offshore and domestic market has witnessed increasing

participation from non-resident players like FPIs in debt.

With a view to develop a deep IRS market that

accommodates divergent participants, RBI had proposed to

permit non-residents.access to the rupee IRS market in the

country.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

COUNTRY : India

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