RBI issues draft on rupee Interest Rate (IR) derivatives

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RBI issues draft on rupee Interest Rate (IR) derivatives
RBI issues draft on rupee Interest Rate (IR) derivatives

RBI issues draft on rupee Interest Rate (IR) derivatives. The Reserve Bank of India (RBI) proposed allowing foreign portfolio investors (FPIs) to undertake exchange-traded rupee interest rate derivatives transactions subject to an overall ceiling of Rs 5,000 crore.

Aim:

These RBI Proposed Interest Rate Derivatives (Reserve Bank) Directions, 2020 are aimed at encouraging higher non-resident participation, enhance the role of domestic market makers in the offshore market, improve transparency, and achieve better regulatory oversight, according to the RBI.

Interest Rate Derivatives:

Interest Rate Derivatives (IRD) are contracts whose value is derived from one or more interest rates, prices of interest rate instruments, or interest rate indices.

Foreign Portfolio Investment (FPIs):

A foreign portfolio investment is the group of assets that include bonds, cash equivalents and stocks. Investments of the portfolios are held directly by an investor and are managed by financial professionals.

About RBI:

  • Headquarters: Mumbai
  • Governor: Shaktikanta Das
  • Founded: 1 April 1935

Related Questions:

1) Which organization has released a draft framework for grant of recognition to an industry association as a Self-Regulatory Organization (SRO) for Payment System Operators? – RBI

2) Which Panel Recommendations are accepted by RBI for Loan Restructuring? – Kamal Nath Panel

3) The Digital Payment Index will be launched by which Financial Institution? – RBI

4) RBI announced additional OMO of how many crores to ensure orderly market conditions? – Rs  20000 crore

5) Which institution is to set up a new Umbrella entity for retail payments? – RBI

6) Recently, RBI approved Sashidhar Jagdishan as next MD & CEO of which bank? – HDFC Bank

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