Mumbai: The Reserve Bank of India (RBI) on Monday said it has permitted category–I banks to offer foreign exchange prices to users at all times, out of their Indian books, either by a domestic sales team or through their overseas branches.
The move was a step in the right direction to help traders hedge their bets on the domestic front, said dealers.
“Authorised dealers may undertake customer (persons resident in India and persons resident outside India) and inter-bank transactions beyond onshore market hours. Transactions with persons resident outside India, through their foreign branches and subsidiaries may also be undertaken beyond onshore market hours,” RBI said in a release.
“Lots of derivatives products have moved out of India, and a lot of hedging happens outside India,” said Ashutosh Khajuria, executive director and CFO, Federal Bank.
“This move seems to help Indian market match the timing, to help foreign investors who want to hedge their positions do so domestically. Now, that NEFT is also 24/7, settlement between the banks is also not an issue,” said Khajuria.
“All dots when connected, suggest that we want to elongate our market hours and if need be, we can offer them the products. This is one more effort to activate our IBUs (international banking units ) in the Gift City,” he added.
The central bank said it accepted the recommendation of the task force on offshore rupee market.
Source: economictimes.indiatimes.com