The RBI revised provisions on deferment of option premium under the Commercial Banks – Miscellaneous Directions, 2025, aligning with updated forthcoming instructions and market practices.
RBI Amends Commercial Banks Miscellaneous Directions
On October 7, 2026, the Reserve Bank of India issued the Reserve Bank of India (Commercial Banks – Miscellaneous) Amendment Directions, 2026, amending Sub-section D of Chapter IV of the 2025 Directions relating to the deferment of option premium in derivative contracts.
The amendment follows the issuance of the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Amendment Directions, 2026, and is intended to ensure consistency across regulatory instruments. It clarifies conditions under which deferment of foreign exchange option premiums may be permitted by Authorised Dealers, particularly in cases linked to genuine trade or investment flows.
Previously, ambiguity around premium deferment led to divergent practices among banks. The revised text standardises eligibility criteria, requiring documented evidence of underlying exposure and board-approved policies for risk control. This harmonisation supports transparency and reduces arbitrage opportunities.
For legal advisors, the update necessitates a review of customer contracts involving deferred premium structures. Institutions must also ensure that treasury and compliance units are aligned with the new guidelines to avoid supervisory scrutiny. This incremental but important clarification enhances regulatory clarity in complex derivative transactions.
Citations
- Reserve Bank of India (Commercial Banks – Miscellaneous) Amendment Directions, 2026, dated October 7, 2026
