The task force had emphasised the need to limit impact of the non-deliverable forwards market on the onshore market and curb volatility in the foreign exchange rate The Reserve Bank of India allowed offshore units of Indian banks to participate in the offshore rupee derivative market to curtail volatility in currency markets due to the Covid-19 pandemic.
Announcing the monetary policy, RBI governor Shaktikanta Das said that banks will now be allowed to participate in the non-deliverable forward (NDF) market, which till now has primarily been dominated by offshore traders in the Indian foreign exchange market. “The time is apposite to improve efficiency of price discovery.