News

RBI Enhances Forex Surveillance by Making "Spot Deals" Reporting Mandatory.

Banking & Finance | Dated: 20 Nov 2024

On November 8, 2024, the Reserve Bank of India (RBI) expanded its foreign exchange (forex) reporting requirements to include spot deals in order to ensure the completeness of transaction data in the trade repository (TR) of the Clearing Corporation of India Limited (CCI) in the Indian forex market.

🎯 Key Highlights:

- With effect from February 10, 2025, authorized dealers will be required to report all inter-bank foreign exchange spot transactions, including cash and tom (tomorrow-next day) transactions, to the TR of CCIL.
- Previously, authorized dealers reported all over-the-counter (OTC) forex derivative contracts and foreign currency interest rate derivative contracts either directly or through their overseas entities to the TR of CCIL.
- A spot deal involves exchanging currencies at the current market rate, typically settled within two business days. Cash deals settle the same day, while TOM (tomorrow) deals settle the next working day.

💡 Other Important Facts:

(i) With the expanded reporting framework, the RBI effectively tracks real-time forex market trends and can better assess liquidity and volatility, making authorized dealers more responsible for the accuracy of transactions.
(ii) The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 59.20 lakh on South Indian Bank (SIB) for non-compliance with certain directions on 'interest rate on deposits' and 'customer service' in banks. This penalty has been imposed under the provisions of Section 47 A (1) (c) with Section 46 (4) (i) of the Banking Regulation (BR) Act.

📚 Test Your Knowledge:

Which institution recently mandated the reporting of "Spot Deals" in the Indian forex market to enhance surveillance?

Correct Answer: RBI

🚀 Quick Recap:

About RBI

CEO : Shaktikanta Das
Headquarter : Mumbai