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JC - Legal Updates - AD Banks (with IBU) can offer NDDCs to residents

Legal Updates

09 Jun 2023

AD Banks (with IBU) can offer NDDCs to residents

The AD Category- I Banks (“AD Banks”) are now allowed to offer non-deliverable derivatives contracts (“NDDCs”) involving INR to resident non-retail users. 
Technical Details:

   AD Banks operating an IFSC Banking Unit ("IBU”) are permitted to offer NDDCs to (non-retail) resident users. These contracts are to be cash settled in INR. 

   Previously, AD Banks having an IBU were permitted to offer NDDCs to only non-residents. These NDDCs were cash settled in foreign currency only.

Also, flexibility has been introduced to cash settle NDDCs in INR or foreign currency between:
     >   2 AD Cat-I banks; and

     >   AD Cat-I bank and a person resident outside India.

   Accordingly, the Master Direction on Risk Management and Interbank Dealings has been amended.  
JC Key Takeaways:

This step will boost the INR market. These amendments also provide greater flexibility to users to efficiently design their hedging programs. 
For further details, please see:
For any queries/clarifications, please feel free to ping us and we will be happy to chat:

Ms. Smrithi Nair (smrithi.nair@jclex.com)

Ms. Aashka Shah (aashka.shah@jclex.com)