The Reserve Bank of India (RBI) and the capital market regulator
Securities Exchange Board of India (SEBI) have notified guidelines
for exchange traded currency futures. Currency Futures are
standardized foreign exchange derivative contracts traded on a
stock exchange to buy or sell one currency against another on a
specified future date, at a price specified on the date of
contract.
Under the current guidelines non-resident investors have been
restrained from entering into currency derivative contracts in
India. As a result, foreign investors such as foreign portfolio
investors, hedge funds and even non-resident Indians cannot trade
in currency futures in India.
Banks require a minimum net worth of Rs 500 crore to trade in
these derivative instruments. The other criteria for being allowed
to trade include ensuring a capital adequacy of 10 per cent and a
record of containing bad loans after setting aside provisions or
net non-performing assets (NPAs) within 3% of
