The RBI's offshore swap reporting strategy may be resisted by international banks.

According to persons familiar with the situation, international lenders intend to request that India's central bank relax a rule requiring them to disclose trading in offshore interest-rate derivatives. The sources, who asked not to be named because the talks are private, stated that following the Reserve Bank of India's directive could cause jurisdictional issues with other monetary authorities and raise worries about client confidentiality. In an effort to increase market openness, the RBI instructed banks in a draft circular released on June 16 to start disclosing international transactions within a year of the final directives. The discussions take place as the number of Indian interest-rate swaps traded offshore soars. According to the sources, bankers have held talks through international financial market industry associations, and by the deadline of July 7, they should provide the RBI with official feedback. According to them, a draft letter from the banks to the RBI is presently being distributed for their approval. Offering the RBI aggregated transaction data instead of a trade-by-trade analysis is one of the recommendations banks intend to make, according to the individuals. They added that the central bank's direct access to data from offshore trade repositories is another concept being considered. International banks are preparing to challenge the Reserve Bank of India’s (RBI) proposed directive that mandates disclosure of offshore interest-rate derivative transactions. The RBI issued a draft circular on June 16 requiring banks to start reporting these transactions within one year of the final guidelines. This move is part of the RBI’s broader effort to increase transparency in the financial markets, especially as offshore trading of Indian interest-rate swaps continues to surge. However, international lenders have expressed significant concerns. They believe that complying with this rule could create jurisdictional conflicts with other global financial regulators. Additionally, there are serious worries about protecting client confidentiality, as detailed trade-by-trade reporting may expose sensitive client information that typically remains private in offshore markets. To address these concerns, bankers have initiated discussions through international financial industry associations and are working on a collective response. They are expected to submit their formal feedback to the RBI by the July 7 deadline. A key recommendation being considered is providing aggregated transaction data instead of individual trade details, which could satisfy the RBI’s transparency goal while safeguarding client privacy. Another suggestion being explored is offering the RBI direct access to offshore trade repositories, which would allow the regulator to monitor transactions without forcing banks to submit each trade separately. These proposals aim to balance regulatory oversight with the practical challenges of global banking operations. The final decision from the RBI will likely have a lasting impact on how cross-border financial activities are reported and regulated in the future.