RBI Deputy Governor Rohit Jain has identified significant inconsistencies in retail foreign exchange pricing, stating that Indian lenders' retail forex pricing shows a gap between regulatory intent and market outcome. Speaking in a speech released by the RBI on Wednesday, Jain emphasized that banks should put in place clear policies governing charges and timelines for customer transactions. A recent review conducted by the RBI revealed certain gaps in banks' policies governing customer transactions, charges and documents required for outward remittances. As reported by ETBFSI, Jain noted that "We have found multiple documentation requirements and cases of delay in executing cross-border remittances," adding that the central bank has authorised lenders to outline clear policies for documentation charges, timelines, escalations and grievance redressals. The Bharat Connect pilot, launched in October 2025, allows customers to transact through banks and apps they already use and is expected to expand to more banks, currency pairs and user categories.
RBI Deputy Governor Rohit Jain highlighted a significant gap in India's forex market participation, stating that public sector banks are underparticipating in the forex derivatives market relative to their balance sheet size. Speaking at the Annual Day of the Foreign Exchange Dealers' Association of India (FEDAI) on 14 August, Jain noted that while PSU banks hold deep relationships with MSMEs and smaller corporates outside major cities, their involvement in forex derivatives remains disproportionately low relative to their balance sheet size. The client segment continues to be dominated by large corporates, while smaller clients who could benefit from currency risk hedging remain underrepresented. As reported by Business Standard, Jain emphasized that policy can create the option but it is the Authorised Dealers who will determine whether this happens, with the success of market-driven solutions depending on commercial viability and market-determined rates. Expanding the market-maker base, raising public sector bank participation, and encouraging electronic platforms are necessary priorities to be pursued, Jain added, emphasizing that banks need clear policies on documentation, charges, timelines, escalation and grievance redressal that should be accessible to customers.
RBI Deputy Governor Rohit Jain emphasized that local currencies are set to play a larger role in cross-border trade and payments, enhancing efficiency and reducing costs. Speaking at the Annual Day of the Foreign Exchange Dealers' Association of India (FEDAI) on 14 August, Jain highlighted that by their very nature, markets are continuously evolving and parameters of their readiness are being regularly renewed according to the needs of the time. The Special Rupee Vostro Account (SRVA) framework has been implemented for invoicing, payment and settlement of international trade in rupees, keeping in view the evolving dynamics of India's international trade. Its success will depend on commercial viability, emphasis on trade settlement in local currencies, offering market-determined rates, and strengthening confidence in the settlement ecosystem. As reported by ETBFSI, Jain noted that "The settlement of cross-border transactions in local currencies results in lower transaction costs, fewer currency mismatches, better settlement efficiency, and the ability to trade where correspondent banking is costly or constrained."
RBI Deputy Governor Rohit Jain emphasized that India's foreign exchange markets should not fear integration with global liquidity but work to strengthen risk management and oversight arrangements. Speaking at the Annual Day of the Foreign Exchange Dealers' Association of India (FEDAI) on 14 August, Jain cited the recent central bank crackdown on forex positions in offshore markets as an example of managing integration effectively. The RBI introduced a $100 million cap on net open positions in the onshore market on 27 March 2026, followed by barring banks from offering rupee-linked NDFs on 1 April 2026 due to exploitation by certain corporations. While some measures have been partially withdrawn, the $100 million cap remains in place and banks are still barred from undertaking all foreign-exchange derivative transactions with related parties. As reported by Business Standard, Jain noted that a strictly principles-based regime carries its own risk of inconsistency, with detailed rules creating rigidity while principles can create interpretational divergence.
Jain identified leveraging technology across the customer chain as another key driver for India's forex markets in the coming decade. As reported by NDTV Profit, he emphasized that foreign exchange transactions should be digital from origination to reporting. According to Mint, artificial intelligence and machine learning can genuinely assist in document classification, anomaly detection, reporting, and product standardization. However, he stressed that accountability cannot be automated, and the Indian market faces challenges in realizing its full potential due to skewed participation where public sector banks under-participate in forex derivatives relative to their balance sheet size. Jain warned against illegal online forex platforms, noting that the RBI continues to receive fraud and cheating complaints about these unregulated entities. As reported by ETBFSI, he urged banks and FEDAI members to "sensitise your customers and your staff suitably," emphasizing that before initiating a transaction, a customer should know what is required, what it will cost, how long it will take, and where to go if something goes wrong. The Reserve Bank's Alert List, cautionary advisories and awareness campaigns address this from the regulator's side, while the heavier responsibility rests with FEDAI members and the banks who deal with the public every day. Jain also asked FEDAI to innovate for scale and resilience in the foreign exchange market.
India's forex market has demonstrated remarkable expansion, with the average daily turnover in the domestic forex market, spot and derivatives combined, doubling from ₹3,38,000 crore ($41 billion) in FY22 to approximately ₹6,40,000 crore ($80 billion) at present. According to Business Standard, the notional outstanding in rupee derivatives has nearly quadrupled since FY21 to around ₹130 trillion, while the latest BIS Triennial Survey estimated combined onshore and offshore daily turnover in the rupee at $185 billion in 2025, up from $119 billion in 2022. The interbank segment, which accounts for around 70 per cent of onshore volumes, has grown faster than the client segment, indicating deeper bank participation in price discovery. Registrations of forex derivatives with CCIL's trade repository have doubled to around 87,000 in 2025 from 43,000 in 2019, reflecting increased market participation and transparency. India's foreign exchange reserves have risen from about USD 38 billion in 2000 to USD 691 billion in 2026, indicating the country's growing economic strength and international engagement.
