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Master Circular on Risk Management and Inter-Bank Dealings (2008)

Current · Source: Reserve Bank of India · RBI/2008-09/19 · issued 01 Jul 2008 · ~2 min read

Quick answerRBI consolidated all instructions on risk management and inter-bank dealings into one master circular, effective July 1, 2008, with a one-year sunset clause. It covers rupee accounts of non-resident banks, inter-bank transactions, and forex derivative contracts.

The rule, in the simplest words

Banks must follow RBI's rules on risk management and inter-bank dealings, which cover rupee accounts of non-resident banks, inter-bank transactions, and forex derivative contracts.
Banks have a single reference point for these rules, which is the Master Circular on Risk Management and Inter-Bank Dealings.
The Master Circular will be updated regularly, so banks must stay alert for the next version, which will replace the current one on July 1, 2009.

How it plays out — a real example

Ava, a risk management officer in Mumbai, reviews the Master Circular on Risk Management and Inter-Bank Dealings to ensure her bank's policies align with RBI's instructions. She updates the internal compliance checklist to reference the master circular instead of older individual circulars, and trains her team on the consolidated rules, especially for non-resident bank accounts and forex derivative contracts.

What changed

RBI issued Master Circular No. 06/2008-09 on July 1, 2008, consolidating all existing instructions on risk management and inter-bank dealings into a single document. The circular is based on earlier FEMA notifications (FEMA 1/2000-RB, FEMA 3/RB-2000, and FEMA 25/RB-2000) and their amendments. It includes a sunset clause, meaning it will be withdrawn on July 1, 2009, and replaced by an updated version.

What it means for you

Banks now have a single reference point for rules on rupee accounts of non-resident banks, inter-bank dealings, and foreign exchange derivative contracts, simplifying compliance. The one-year sunset clause signals that RBI expects to update these instructions regularly, so banks must stay alert for the next version. This consolidation reduces the need to track multiple circulars, but banks should verify they are using the latest version after July 2009.

What you must do

Review the master circular to ensure your bank's policies align with the consolidated instructions on risk management and inter-bank dealings.
Update internal compliance checklists to reference this master circular instead of older individual circulars.
Prepare for the sunset clause by planning to adopt the updated master circular expected after July 1, 2009.
Train relevant staff on the consolidated rules, especially for non-resident bank accounts and forex derivative contracts.

Who it affects

All Authorised Dealers - Category I banks, Bank treasury and risk management teams, Compliance departments handling forex and inter-bank transactions

❓ Common questions

Regulatory timeline

Stated effective date effective July 1, 2008
Decoded by BankPulse 2026-06-19 13:19 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the sunset clause in this master circular?

The circular includes a sunset clause stating it will stand withdrawn on July 1, 2009, and will be replaced by an updated master circular on the same subject.

Which earlier regulations form the basis of this master circular?

The circular is based on FEMA Notification No. 1/2000-RB, Regulation 4(2) of FEMA 3/RB-2000, and FEMA 25/RB-2000 dated May 3, 2000, along with their subsequent amendments.

Does this circular introduce new rules or just consolidate existing ones?

It consolidates existing instructions on risk management and inter-bank dealings into one place; it does not introduce new rules.

📜 Read the original circular — full text as issued by RBI

RBI/2008-09/19 

 Master Circular No./06/2008-09 

 July 1,  2008 

 To,

          All Authorised Dealers - Category I banks

 Madam / Sir,

 Master Circular on Risk Management and Inter-Bank Dealings 

 Rupee Accounts of Non-Resident Banks, Inter-Bank Dealings, Foreign Exchange Derivative Contracts, etc. are governed by the provisions in Notification No. FEMA 1/2000-RB , Regulation 4(2) of Notification No. FEMA 3/RB-2000 and Notification No. FEMA 25/RB-2000 dated May 3, 2000 and subsequent amendments thereto.

 2. This Master Circular consolidates the existing instructions on the subject of "Risk Management and Inter-Bank Dealings" at one place. The list of underlying circulars/notifications is set out in Appendix. 

 3. This Master Circular is issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2009 and would be replaced by an updated Master Circular on the subject.

 Yours faithfully,

 (Salim Gangadharan)

 Chief General Manager-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/19 · issued 01 Jul 2008. The plain-English explanation above is BankPulse’s own independent summary.

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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Authorised Dealers - Category I banks, Bank treasury and risk management teams, Compliance departments handling forex and inter-bank transactions), your first concrete step on “Master Circular on Risk Management and Inter-Bank Dealings (2008)” is: “Review the master circular to ensure your bank's policies align with the consolidated instructions on risk management and inter-bank dealings.” (RBI issued this 01 Jul 2008).

Circular: RBI/2008-09/19 -- Master Circular on Risk Management and Inter-Bank Dealings (2008)
Issued: 01 Jul 2008
Action required: Review the master circular to ensure your bank's policies align with the consolidated instructions on risk management and inter-bank dealings.
Action required: Update internal compliance checklists to reference this master circular instead of older individual circulars.
Action required: Prepare for the sunset clause by planning to adopt the updated master circular expected after July 1, 2009.
Action required: Train relevant staff on the consolidated rules, especially for non-resident bank accounts and forex derivative contracts.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4334&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.