The Reserve Bank of India’s decision to allow banks having a presence in the International Financial Services Centre (IFSC) to offer non-deliverable derivatives contracts (NDDC) to domestic non-retail segments will boost INR trade volumes, experts said.
So far, only residents outside India were allowed to sell these contracts. Now Residents – Non-Retail can also be offered the NDDC. Since it is a non-deliverable contract no delivery of foreign currency of the notional amount will have to be made. The settlement (difference in the two rates) will be in cash either in the foreign currency or in INR.
Gold Rate
20 May 2025
“The price discovery of INR was through the NDF Market outside India. The volumes outside India were also double than that of in India. RBI wants the price discovery to be from the country itself,” said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors LLP.
“Volumes of INR trading in India should increase as market participants get a 24-hour market and will be able to trade in INR against foreign currency in New York timings when a lot of data releases happen and also during the time of FED meeting at night when volatility is at the highest,’ Bhansali said.
“So now Indian participants (non-retail) get a chance to hedge their payables and receivables after-market hours. Gift-City volumes in NDF get a boost and Indian Non-Retail can open accounts there and trade/hedge their payments,” Bhansali added.
