Reserve Bank of India has issued rules allowing banks to offer non-deliverable forward contracts involving the rupee to resident Indians.
These contracts can be issued to non-retail residents for hedging purposes and settled in Indian rupees, the Reserve Bank of India said in a notification.
For contracts with a person resident outside India, the settlement can be in Indian rupees or any foreign currency, it said.
The central bank had announced its plans to expand the NDF market in April but rules were awaited.
Banks can issue these contracts via IFSC banking units. An IFSC Banking Unit, or “IBU”, is a bank permitted by the Reserve Bank of India to operate from an International Financial Services Centre (IFSC).