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The Reserve Bank of India finalizes instructions for the novation of over-the-counter derivative contracts. These instructions apply to foreign exchange, interest rate, government securities, and credit derivative contracts. The Reserve Bank of India incorporates these rules into existing Master Directions. Eligible market participants must follow these updated requirements for any novation of contracts. The rules take effect on September 22, 2026. The Reserve Bank of India issues these directions under the Reserve Bank of India Act, 1934.
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RBI/2026-27/263 FMRD.DIRD.No.04/14.03.066/2026-27
September 22, 2026
To All Eligible Market Participants
Madam / Sir,
Novation of OTC Derivative Contracts
Please refer to the draft Reserve Bank of India (Novation of OTC Derivative Contracts) Directions, 2025, issued vide press release dated July 09, 2025.
Based on the feedback received, the instructions related to the OTC derivative contracts have been finalised. Statement on the major feedback received is provided in the Annex.
With a view to consolidate circulars/instructions, the instructions have been inserted in the respective Directions governing OTC foreign exchange, interest rate, government securities and credit derivative contracts, as follows, and are being issued today.
Master Direction – Risk Management and Inter-Bank Dealings dated July 05, 2016, as amended from time to time.
Master Direction – Reserve Bank of India (Rupee Interest Rate Derivatives) Directions, 2025 dated December 08, 2025, as amended from time to time.
Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025 dated February 21, 2025, as amended from time to time.
Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2026 dated June 25, 2026, as amended from time to time.
The instructions shall be applicable to any novation undertaken on or after the date of issue of this circular.
These Directions have been issued by the Reserve Bank in exercise of the powers conferred under section 45W of the Reserve Bank of India Act, 1934, read with section 45U of the Act and of all the powers enabling it in this behalf.
Yours faithfully
(Dimple Bhandia) Chief General Manager
