Current · Source: Reserve Bank of India · RBI/2010-11/433 · issued 17 Mar 2011 · ~1 min read
Quick answerRBI has permitted Primary (Urban) Cooperative Banks to trade Interest Rate Futures on 91-day Treasury Bills, expanding their hedging toolkit beyond the existing 10-year government security futures.
What changed
RBI amended its Interest Rate Futures Directions to include 91-day Treasury Bills as an eligible underlying for futures contracts. Previously, only 10-year notional coupon-bearing government securities were permitted. The new 91-day T-Bill futures will be cash-settled, with the final settlement price based on the weighted average yield from the weekly T-Bill auction.
What it means for you
UCBs now have a short-term interest rate hedging instrument, complementing the existing long-term IRF. This allows better management of interest rate risk on shorter-duration assets and liabilities. Cash settlement simplifies the process compared to physical delivery required for 10-year IRFs.
What you must do
Update your risk management policy to include 91-day T-Bill futures as a permitted hedging instrument.
Ensure treasury and dealing staff are trained on the features and settlement mechanism of the new contract.
Review and update internal exposure limits and reporting frameworks to accommodate the new product.
Coordinate with depositories and exchanges to confirm operational readiness for trading and settlement.
Who it affects
Primary (Urban) Cooperative Banks, Treasury departments of UCBs, Risk management teams at UCBs, Compliance officers at UCBs
❓ Common questions
What is the settlement method for 91-day T-Bill futures?
The contract is cash-settled in Indian Rupees, with the final settlement price derived from the weighted average price/yield of the weekly 91-day T-Bill auction on the expiry date.
Can UCBs still trade 10-year IRFs?
Yes, the existing 10-year notional coupon-bearing government security IRFs remain available. The amendment adds 91-day T-Bill futures as an additional product.
Which regulatory framework governs these futures?
The Interest Rate Futures (Reserve Bank) (Amendment) Directions, 2011, issued under Section 45W of the RBI Act, 1934, along with SEBI guidelines for exchange-traded derivatives.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/433
UBD.BPD. (PCB).Cir.No. 40/13.01.000/2010-11
March 17, 2011
Chief Executive Officers of
All Primary (Urban) Cooperative Banks
Dear Sir / Madam,
Exchange Traded Interest Rate Futures (IRFs) – UCBs
Please refer to circular No. UBD (PCB) BPD. Cir No.17/13.01.000/2009-10 dated October 28, 2009 and UBD (PCB) BPD. Cir No.37/13.01.000/2009-10 dated December 21, 2009 on the captioned subject.
2. It has been decided to introduce Interest Rate Futures on 91-Day Treasury Bills issued by Government of India. In this regard, Reserve Bank of India has issued an amendment direction IDMD.PCD.27/ED(HRK)-2010 dated March 7, 2011 under section 45W of the Reserve Bank of India Act, 1934, which has been placed on the Reserve Bank of India website ( www.rbi.org.in ). A copy of the Direction is enclosed .
Yours faithfully,
(Uma Shankar)
Chief General Manager
Encl: As above.
RESERVE BANK OF INDIA
INTERNAL DEBT MANAGEMENT DEPARTMENT
23rd FLOOR, CENTRAL OFFICE FORT
MUMBAI 400 001
Interest Rate Futures (Reserve Bank) (Amendment) Directions, 2011
IDMD.PCD. 27 /ED (HRK) - 2010 dated March 7, 2011
The Reserve Bank of India having considered it necessary in public interest and to regulate the financial system of the country to its advantage, in exercise of the powers conferred by section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby amends the Directions contained in Notification FMD.MSRG.1/02.04.003/2009-10 dated August 28, 2009 (hereinafter referred to as ‘Directions’) as follows, namely -
1. In paragraph 3(i) of the Directions, after the words “are permitted on” and before the words “10-year notional coupon bearing Government of India security” the following words shall be inserted:
“91-Day Treasury Bills,”
2. Paragraph 4 of the Directions shall be amended to read as under –
4. Features of Interest Rate Futures
4.1 The 10-year Interest Rate Futures contract shall have the following features:
The contract shall be on 10-year notional coupon bearing Government of India security.
The notional coupon shall be 7% per annum with semi-annual compounding.
The contract shall be settled by physical delivery of deliverable grade securities using the electronic book entry system of the existing Depositories, namely, National Securities Depositories Ltd. and Central Depository Services (India) Ltd. and Public Debt Office of the Reserve Bank.
Deliverable grade securities’ shall comprise GoI securities maturing at least 7.5 years but not more than 15 years from the first day of the delivery month with a minimum total outstanding stock of ` 10,000 crore. Exchanges may fix their own basket of securities for delivery from the deliverable grade securities in accordance with guidelines issued by the Securities Exchange Board of India from time to time.
4.2 The 91-Day T-Bill Futures shall have the following features:
The contract shall be on 91-Day Treasury Bills issued by the Government of India.
The contract shall be cash settled in Indian Rupees.
The final settlement price of the contract shall be based on the weighted average price/yield obtained in the weekly auction of the 91-Day Treasury Bills on the date of expiry of the contract.
(H R Khan)
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/433 · issued 17 Mar 2011. The plain-English explanation above is BankPulse’s own independent summary.
Ensure treasury and dealing staff are trained on the features and settlement mechanism of the new contract.
Coordinate with depositories and exchanges to confirm operational readiness for trading and settlement.
📜 Compliance
Update your risk management policy to include 91-day T-Bill futures as a permitted hedging instrument.
Review and update internal exposure limits and reporting frameworks to accommodate the new product.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Primary (Urban) Cooperative Banks, Treasury departments of UCBs, Risk management teams at UCBs, Compliance officers at UCBs), your first concrete step on “RBI Allows UCBs to Trade 91-Day T-Bill Futures” is: “Update your risk management policy to include 91-day T-Bill futures as a permitted hedging instrument.” (RBI issued this 17 Mar 2011).
Action required: Update your risk management policy to include 91-day T-Bill futures as a permitted hedging instrument.
Action required: Ensure treasury and dealing staff are trained on the features and settlement mechanism of the new contract.
Action required: Review and update internal exposure limits and reporting frameworks to accommodate the new product.
Action required: Coordinate with depositories and exchanges to confirm operational readiness for trading and settlement.
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 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=6292&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.
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