The Reserve Bank of India has updated its Master Direction on Risk Management and Inter-Bank Dealings, introducing revised rules for foreign exchange derivative rollovers and IFSC unit operations.
RBI Issues Revised Risk Management Framework for Authorised Dealers
The Reserve Bank of India (RBI) has issued three circulars dated October 10 and 12, 2026, amending the Master Direction – Risk Management and Inter-Bank Dealings, 2016. The amendments apply to Authorised Dealers (ADs), particularly Category-I banks operating International Financial Services Centre (IFSC) Banking Units and standalone entities.
One key change pertains to the cancellation and rebooking or rollovers of foreign exchange derivative contracts. Under the revised guidelines, authorised dealers must ensure that such transactions are not undertaken to circumvent regulatory reporting or to mask speculative positions. The new direction mandates documented risk assessment and internal approval processes for all rollover transactions exceeding prescribed thresholds.
Additionally, the RBI has clarified compliance expectations for banks with IFSC-based operations, requiring adherence to prudential norms while permitting operational flexibility. These measures aim to strengthen risk governance and ensure consistency with international standards. Financial institutions must align internal policies with the circulars by the next reporting cycle.