The Reserve Bank of India has permitted Standalone Primary Dealers (SPDs) authorised as Authorised Dealer Category-III (AD Cat-III) to participate in non-deliverable derivative contracts (NDDCs) involving the Rupee, a facility earlier available only to AD Cat-I banks operating an IFSC Banking Unit (IBU). This change enables SPDs to transact in NDDCs with both residents and non-residents, thereby widening market participation and deepening liquidity in the offshore rupee derivative market.
The amendments made in the Master Direction – Risk Management and Inter-Bank Dealings are four specific insertions to bring Standalone Primary Dealers (SPDs) authorised as AD Cat-III within the scope of non-deliverable rupee derivative contracts (NDDCs). These are:
| Paragraph | Before Amendment | After Amendment |
|---|---|---|
| Part-A (Section-I), Para 2.2(vi) | Transactions in NDDCs could be offered by AD Cat-I banks operating IBUs. | Added: “Such transactions can also be offered to residents and non-residents by Standalone Primary Dealers authorised as Authorised Dealer Category-III.” |
| Part-A (Section-I), Para 2.3(iii) | Mentioned only “IFSC Banking Unit” in the eligible participants. | Inserted after: “and Standalone Primary Dealers authorised as Authorised Dealer Category-III.” |
| Part-C, Para 3A (first insertion) | Referred only to regulatory framework (“as amended from time to time”). | Added after: “and Standalone Primary Dealers authorised as Authorised Dealer Category-III.” |
| Part-C, Para 3A (second insertion) | Covered only entities “having IBUs”. | Added after: “Standalone Primary Dealers authorised as Authorised Dealer Category-III.” |
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12897&Mode=0
