NON-DELIVERABLE FORWARD (NDF) MARKET

About:

• NDFs are foreign exchange derivative instruments on non-convertible or restricted currencies traded over the counter (OTC) mainly at offshore centres outside the direct jurisdiction of the respective national authorities.
  
  
• The RBI took the decision despite the recommendation by a task force set up by it against allowing banks in the NDF market. The task force submitted its report in July 2019.
  
  
• The Task Force on Offshore Rupee Markets, set up by the RBI, had proposed that Indian banks should not be permitted to deal in the offshore rupee derivative market — or the NDF market — for the present as the downside of permitting them to deal in this market outweighs the advantages.