**Executive Summary**
This circular, issued by the Reserve Bank of India on September 22, 2025, amends the Master Direction on Risk Management and Inter-Bank Dealings. It expands participation in non-deliverable rupee derivative (NDDC) markets to include Standalone Primary Dealers (SPDs) authorised as Authorised Dealer Category-III (AD Cat-III). The instructions are effective immediately.
**Key Points / Main Content**
* **Eligibility for SPDs:**
* Standalone Primary Dealers (SPDs) authorised as Authorised Dealer Category-III (AD Cat-III) are now eligible to transact in non-deliverable derivative contracts (NDDCs) involving the Rupee.
* **Amendments to Master Direction:**
* Paragraph 2.2(vi) of Part-A (Section-l): At the end of the existing paragraph, the following words shall be added: "Such transactions can also be offered to residents and non-residents by Standalone Primary Dealers authorised as Authorised Dealer Category-III.”
* Paragraph 2.3(iii) of Part-A (Section-l): After the words “IFSC Banking Unit”, the following words shall be inserted: "and Standalone Primary Dealers authorised as Authorised Dealer Category-III”
* Paragraph 3A of Part-C: After the words "(as amended from time to time))", the following words shall be inserted: "and Standalone Primary Dealers authorised as Authorised Dealer Category-III”
* Paragraph 3A of Part-C: After the words "having IBUs", the following words shall be inserted: "Standalone Primary Dealers authorised as Authorised Dealer Category-III”
* **Applicability:**
* The circular applies to Authorised Dealer Category-I (AD Cat-I) banks and SPDs authorised as AD Cat-III under Section 10 (1) of the Foreign Exchange Management Act (FEMA), 1999.
* **Legal Basis:**
* The directions are issued under Section 45W of the Reserve Bank of India Act, 1934, and Sections 10(4), 11(1), and 11(2) of FEMA, 1999.
**Impact Analysis**
**Authorised Dealer Category-I (AD Cat-I) banks with IFSC Banking Units (IBUs):**
**Impact:**
AD Cat-I banks operating IBUs are now able to offer transactions to residents and non-residents by Standalone Primary Dealers authorised as Authorised Dealer Category-III.
**Action Required:**
Update internal procedures to incorporate transactions with SPDs, per the amended Master Direction.
**Standalone Primary Dealers (SPDs) authorised as Authorised Dealer Category-III (AD Cat-III):**
**Impact:**
SPDs are now eligible to participate in the non-deliverable derivative contracts (NDDCs) market involving the Rupee.
**Action Required:**
Ensure compliance with the Master Direction, as amended, and establish necessary infrastructure for NDDC transactions.
**Residents and Non-residents:**
**Impact:**
Residents and non-residents can now avail NDDC services through Standalone Primary Dealers authorised as Authorised Dealer Category-III
**Action Required:**
Review and evaluate the newly availably services.
Key Entities Referenced
Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016: RBI's master direction on risk management and inter-bank dealings, which is being updated by this circular.
Foreign Exchange Management Act (FEMA), 1999: The Indian law that provides the legal framework for foreign exchange transactions, which the circular references in relation to AD Cat-I and Cat-III authorizations.
Authorised Dealer Category-III (AD Cat-III): Authorised dealer category, which Standalone Primary Dealers (SPDs) are now authorised to participate in.
Authorised Dealer Category-I (AD Cat-I): Authorised dealer category, which AD Cat-I banks in India operating an International Financial Services Centre (IFSC) Banking Unit (IBU) belong to.
Standalone Primary Dealers (SPDs): Entities that are now eligible to transact in non-deliverable derivative contracts (NDDCs) involving the Rupee.
भारतीय ररज़र् व बैंक
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2025-26/78
A. P. (DIR Series) Circular No. 10 September 22, 2025
To,
All Authorised Persons
Madam/Sir,
Participation of Standalone Primary Dealers in Non-deliverable Rupee Derivative
Markets
Attention of Authorised Persons is invited to the Foreign Exchange Management (Foreign
Exchange Derivative Contracts) Regulations, 2000 dated May 03, 2000 [Notification no.
FEMA.25/RB-2000 dated May 03, 2000], as amended from time to time and the Master
Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended
from time to time (hereinafter referred as ‘Master Direction’).
2. Authorised Dealer Category-I (AD Cat-I) banks in India operating an International
Financial Services Centre (IFSC) Banking Unit (IBU), have been permitted under the
Master Direction to transact in non-deliverable derivative contracts (NDDCs) involving the
Rupee with users, other AD Cat-I banks operating an IBU and banks overseas. On a
review, it has been decided that Standalone Primary Dealers (SPDs) authorised as
Authorised Dealer Category–III (AD Cat-III), shall also be eligible to transact in NDDCs
involving the Rupee.
3. These instructions shall be applicable with immediate effect. The Master Direction has
been updated as under:
(i) In paragraph 2.2(vi) of Part-A (Section-I), at the end of the existing paragraph,
the following words shall be added, namely: -
वर्त्तीय बाज़ार वर्वियमि वर्भाग, केंद्रीय कायावलय, 9र्ी मंविल, केन्द्रीय कायावलय भर्ि, शहीद भगत व ंह मागव, फोर्व, म ंबई – 400 001
फोि: (91-22) 2260 1000, फैक्स: (91-22) 22702290, ई-मेल: cgmfmrd@rbi.org.in
Financial Markets Regulation Department, Central Office, 9th Floor, Central Office Building, Shahid Bhagat Singh Road, Fort,
Mumbai – 400 001
Tel: (91-22) 2260 1000, Fax: (91-22) 22702290, E-mail: cgmfmrd@rbi.org.in
वहन्दी आ ाि है, इ का प्रयोग
बढ़ाइए“Such transactions can also be offered to residents and non-residents by
Standalone Primary Dealers authorised as Authorised Dealer Category-III.”
(ii) In paragraph 2.3(iii) of Part-A (Section-I), after the words “IFSC Banking Unit”,
the following words shall be inserted, namely: -
“and Standalone Primary Dealers authorised as Authorised Dealer Category-III”
(iii) In paragraph 3A of Part-C, after the words “(as amended from time to time))”, the
following words shall be inserted, namely: -
“and Standalone Primary Dealers authorised as Authorised Dealer Category-III”
(iv) In paragraph 3A of Part-C, after the words “having IBUs”, the following words
shall be inserted, namely: -
“Standalone Primary Dealers authorised as Authorised Dealer Category-III”
4. For the purpose of this circular, Authorised Persons shall mean AD Cat-I banks and
SPDs authorised as AD Cat-III under Section 10 (1) of the Foreign Exchange
Management Act (FEMA), 1999.
5. The directions contained in this circular have been issued under Section 45W of the
Reserve Bank of India Act, 1934 and Sections 10(4), 11(1) and 11(2) of the FEMA, 1999
(42 of 1999) and are without prejudice to permissions / approvals, if any, required under
any other law.
Yours faithfully,
(Dimple Bhandia)
Chief General Manager
2