RBI bars automatic cancellation and rollover of FX derivative contracts without fresh credit appraisal. The move strengthens risk governance and client due diligence.
RBI Clarifies FX Derivative Rebooking Rules
In A.P. (DIR Series) Circular No. 25 dated October 10, 2026, the Reserve Bank of India clarified that Authorised Dealers may not automatically cancel and rebook or rollover foreign exchange derivative contracts without conducting a fresh credit appraisal and risk assessment.
The directive emphasizes that each rebooking request must be documented and justified based on the client’s underlying exposure and financial health. This is to prevent misuse of derivatives for speculative purposes and to ensure alignment with the client’s genuine hedging needs.
Financial institutions must revise their internal operating procedures to incorporate mandatory reviews before rollovers. The clarification reinforces prudential norms and reduces systemic risk in forex derivatives markets.
