The draft norms have proposed non-resident Indians' (NRIs) access to the IRD market, allowing them to hedge their rupee interest rate risk flexibly using any available IRD instrument, RBI said in a release.
"Non-residents will also be permitted to participate specifically in the overnight indexed swap (OIS) market for purposes other than hedging," it said.
The central bank has sought comments on the draft guidelines from banks, market participants and other interested parties by December 31.
In its April 2018 policy, the RBI had proposed that NRIs should be given access to the rupee IRD market.
Thin participation and consequent absence of divergence of views result in pricing inefficiencies, which further discourages participation, it had said.
There is an active market for rupee interest rate swaps offshore and domestic market has witnessed increasing participation from non-resident players like FPIs in debt.
With a view to develop a deep IRS market that accommodates divergent participants, RBI had proposed to permit non-residents access to the rupee IRS market in the country.
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