RBI has deleted Paragraph 37 from the Commercial Banks – Miscellaneous Directions, 2025, removing limits on non-option derivative contracts effective immediately.
RBI Eliminates Derivatives Position Limits for Commercial Banks
The Reserve Bank of India has issued the Commercial Banks – Miscellaneous Directions (Second Amendment) Directions, 2026, removing Paragraph 37 which previously restricted non-option derivative contracts for commercial banks.
The deleted provision had imposed position limits on derivatives trading. Its removal grants banks greater autonomy in hedging currency and interest rate exposures, consistent with market evolution and risk management practices.
This change applies across all commercial banks, including public, private, and foreign banks operating in India. Regulated entities must still comply with sectoral caps and reporting requirements under RBI’s prudential framework for derivatives.
