The Reserve Bank of India issued Circular No. 07 dated April 20, 2026, revising instructions on risk management and inter-bank dealings for Authorised Dealers. The circular withdraws earlier directions issued under A.P. (DIR Series) Circular No. 03 dated April 01, 2026. It further restricts Authorised Dealers from undertaking foreign exchange derivative contracts involving INR with related parties, except in limited cases. These exceptions include cancellation or rollover of existing contracts and back-to-back transactions with non-related non-resident users in accordance with the Master Direction on Risk Management and Inter-Bank Dealings dated July 05, 2016. The term “related parties” will follow definitions under Ind AS 24, IAS 24, or equivalent standards. The revised instructions take immediate effect and are issued under Sections 10(4), 11(1), and 11(2) of FEMA, 1999, without affecting other legal approvals.
Reserve Bank of India
RBI/2026-27/14
A.P. (DIR Series) Circular No. 07 | Dated: April 20, 2026
To,
All Authorised Dealers
Madam/Sir,
Risk Management and Inter-Bank Dealings
Attention of Authorised Dealers is invited to the A.P. (DIR Series) Circular No. 24 dated March 27, 2026, the A.P. (DIR Series) Circular No. 03 dated April 01, 2026, and the Master Direction – Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended from time to time.
2. On a review, it has now been decided to withdraw the instructions issued vide A.P. (DIR Series) Circular No. 03 dated April 01, 2026. Further, it has been decided that Authorised Dealers shall not undertake any foreign exchange derivative contract involving INR with their related parties except for the following:
(i) cancellation and rollover of existing contracts; and
(ii) transactions undertaken with non-related non-resident users on a back-to-back basis in terms of the Master Direction – Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended from time to time.
3. ‘Related parties’ shall have the same meaning as assigned to it under the Indian Accounting Standard (Ind AS) 24 – Related Party Disclosures or International Accounting Standard (IAS) 24 – Related Party Disclosures or any other equivalent accounting standards.
4. These instructions shall be applicable with immediate effect.
5. The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Dimple Bhandia)
Chief General Manager
