After a long time, the Reserve Bank of India is ready to lift the ban on ‘exotic currency derivatives’, the double-edged, fancy products that had left a mark of destruction in 2007- 08 in between allegations of mis-selling and court battles when bets by corporates backfired as the euro, Yen and Swiss franc surged.
Over the past month, senior RBI officials have held multiple meetings with bankers to discuss ways to allow these products, albeit with certain safeguards.
“There is mixed reaction among bankers. Some are excited by the possibility of extra margins from sale of exotic instruments while others who took the hit and were dragged to court are apprehensive… particularly, the compliance guys. But everyone is surprised by RBI’s plan to open up the market,” said a senior banker who attended one of the meetings.