RBI tightens norms on rollover and rebooking of foreign exchange derivatives, requiring Authorised Dealers to ensure genuine trade intent and documentation. The move aims to prevent speculative forex trading under the guise of hedging.
RBI Imposes Curbs on Rebooking of Forex Derivatives
The Reserve Bank of India, in Circular No. 25 (A.P. DIR Series) dated October 10, 2026, introduced restrictive conditions on the cancellation and rebooking or rollover of foreign exchange derivative contracts by Authorised Dealers. The directive emphasizes that such transactions must be supported by verifiable underlying trade exposure and proper documentation.
Under the new framework, ADs are prohibited from allowing automatic rollovers of forward contracts unless accompanied by fresh documentation evidencing ongoing exposure. The circular clarifies that repeated cancellation and rebooking will be flagged as potential round-tripping or speculative activity, inviting regulatory scrutiny.
For legal practitioners advising corporate clients on forex hedging, this requires stricter due diligence in maintaining audit trails for derivative positions. Banks must update their internal compliance systems to prevent non-permissible rollovers. The measure strengthens RBI’s oversight of capital account transactions and mitigates risks of regulatory arbitrage.