RBI allows Standalone traders to trade in Rupee in NDF market

Current Context: On 22 September 2025, the Reserve Bank of India (RBI) allowed Standalone Primary Dealers (SPDs), authorised as Authorised Dealer Category‑III (AD Cat‑III), to participate in rupee Non‑Deliverable Derivative Contracts (NDDCs).

• Earlier, only AD Cat‑I banks and IFSC Banking Units (IBUs) were permitted.
• The move expands SPDs’ role as market makers beyond government securities.
• It provides residents and non‑residents with wider hedging options against currency risk.
• The step is expected to deepen liquidity and align offshore and onshore rupee markets.

Question:

Q.1 On 22 September 2025, which new category of institutions did the RBI allow to participate in rupee Non-Deliverable Derivative Contracts (NDDCs)?
a) Scheduled Commercial Banks (SCBs)
b) Cooperative Banks
c) Standalone Primary Dealers (SPDs)
d) Regional Rural Banks (RRBs)

Answer: c) RBI expanded NDDC participation to SPDs authorised as AD Cat-III. Earlier, only AD Cat-I banks and IFSC Banking Units were eligible.