Master Direction – Reserve Bank of India (Rupee Interest Rate Derivatives) Directions, 2025
UR
- Applies toAll regulated entities
- StatusIn force
- RBI text changedRBI updated this document on September 22, 2026. BankPulse is re-reading it. BankPulse checked all 33 points on this page against RBI's new text on 2 October 2026. Every quoted line is still in RBI's text.
- IssuedDec 08, 2025
- Amendmentsnone tracked
- Length33 points in 4 sections · 3 min read
The four dates on this rule
- PublishedDec 08, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyMarch 01, 2026The day this rule starts to apply, as RBI's own text states it.
- Time to get ready83 daysThe room between the day it was published and the day it starts to apply.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
Kept in your browser only. Your desk
Show me the points for
Nothing is removed from the page.
Show me the points about
32 of the 33 points name no product and bind every product. All products.
Numbers to remember
| March 01, 2026 | These rules take effect from March 01, 2026. RBI Para 1 |
| ₹5,000 crore | All foreign portfolio investors together may hold long interest rate futures up to ₹5,000 crore. RBI Para 4 |
| ₹500 crore | A firm needs net worth of ₹500 crore or turnover of ₹1,000 crore to count as non-retail. RBI Para 5 |
| ₹1,000 crore | Non-resident trades done for reasons other than hedging are capped at ₹1,000 crore PVBP. RBI Para 5 |
| one month | RBI may bar a rule-breaker from this market for up to one month at a time. RBI Para 9 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. OTC and exchange trades covered
The rules cover Rupee interest rate derivatives traded over the counter and on stock exchanges.
2. Rules apply from March 2026
These rules take effect from March 01, 2026.
3. Residents and eligible non-residents
Residents may trade freely; non-residents may trade only as far as these rules allow.
4. Non-residents can hedge on exchanges
A non-resident may trade exchange-listed derivatives only to hedge a real exposure.
5. FPI long position cap
All foreign portfolio investors together may hold long interest rate futures up to ₹5,000 crore.
6. Six kinds of market-maker only
Only scheduled banks, primary dealers, an upper-layer NBFC and four development banks may be market-makers.
7. A market-maker must be party
At least one side of every interest rate derivative trade must be a market-maker.
8. Net worth or turnover threshold
A firm needs net worth of ₹500 crore or turnover of ₹1,000 crore to count as non-retail.
9. Unclassified users default to retail
A user who does not qualify as non-retail is treated as a retail user.
10. Retail users may only hedge
A market-maker may offer these products to a retail user only for hedging.
11. MMIFOR trades are hedging only
Derivatives based on the MMIFOR benchmark may only be offered to users for hedging.
12. PVBP on non-hedging trades capped
Non-resident trades done for reasons other than hedging are capped at ₹1,000 crore PVBP.
13. Trading hours run 9-5
OTC trading hours run from 9:00 AM to 5:00 PM on business days.
14. A violator can be barred
RBI may bar a rule-breaker from this market for up to one month at a time.
15. RBI must hear you first
RBI must give the person a chance to be heard before any ban takes effect.
16. A ban is made public
RBI may publicise any such ban once it is imposed.
Do it
1. Exchanges need RBI approval first
An exchange needs RBI's approval before launching or changing any derivative product.
2. CCIL publishes PVBP usage daily
CCIL must publish how much of the PVBP limit is used, every day.
3. Brokers must be accredited
Any broker used for these trades must be accredited by FIMMDA.
4. Trades reported within 30 minutes
A market-maker must report most OTC trades within 30 minutes of doing them.
5. Foreign-currency trades reported by noon
Trades settled in a foreign currency must be reported by noon the next business day.
6. Monthly report due by 10th
Banks must report cross-border remittances by the 10th day of the following month.
7. Follow your own regulator's rules
Each firm follows the capital and KYC rules its own regulator already sets.
8. RBI can demand records anytime
RBI may seek information or a clarification from anyone dealing in these trades.
Background
1. What an interest rate swap
A swap exchanges a stream of agreed interest payments on a notional amount.
2. What hedging means here
Hedging means using a derivative to cut Rupee interest rate risk already carried.
3. What a leveraged derivative is
A leveraged derivative can pay out more than its own notional amount.
4. What a market-maker is
A market-maker is an entity that quotes prices and need not carry underlying risk.
5. What a user is
A user is anyone trading these derivatives who is not a market-maker.
6. Old approvals carry forward
Any exchange approval granted before these rules stands as if granted under them.
7. Accounting follows existing standards
If no accounting rule covers a deal, follow the accountants' institute's own guidance.
8. RBI may publish market data
RBI or an agency it authorises may publish anonymised data on this market.
9. Old contracts run to maturity
Contracts already running under earlier rules continue until they mature or are cancelled.