Well-functioning, liquid and resilient financial markets help monetary policy transmission as well as in allocation and absorption of risks entailed in financing India’s growth.


  • The Reserve Bank has a legislative mandate to regulate the interest rate and foreign exchange markets which are critical for the resilient functioning of the financial system and the broader economy, and for ensuring financial stability. As part of this mandate, the Reserve Bank is tasked with the regulation, development and oversight of the interest rate markets, including the Government Securities market; money markets including the market for repo in Government securities and corporate bonds; foreign exchange markets; derivatives on interest rates/prices, foreign exchange rates and credit. The Reserve Bank is also responsible for the regulation of financial market infrastructure, including financial market benchmarks, for these markets. The Reserve Bank regulates financial markets within the overarching statutory framework of the Reserve Bank of India Act, 1934, the Government Securities Act, 2006, Foreign Exchange Management Act, 1999, the Bilateral Netting of Qualified Financial Contracts Act, 2020 and the Payment and Settlement Systems Act, 2007.
  • The Reserve Bank authorises Electronic Trading Platforms (ETPs) under the Electronic Trading Platforms (Reserve Bank) Directions, 2018. ETPs are any electronic system, other than a recognised stock exchange, on which transactions in eligible instruments like securities, money market instruments, foreign exchange instruments, derivatives, etc. are contracted. No entity shall operate an ETP without obtaining prior authorisation of RBI. The list of ETPs authorised by the RBI is available here.
  • The robustness and reliability of financial benchmarks are critical for efficient pricing and valuation of financial instruments. To improve the governance of the benchmark processes in markets regulated by the RBI, the Financial Benchmark Administrators (Reserve Bank) Directions, 2019, were issued in June 2019. The Financial Benchmarks India Private Limited is authorised under these Directions to act as an administrator for significant benchmarks notified by RBI. The list of benchmarks notified as significant is available here.
  • To promote a robust, fair, liquid, open and appropriately transparent markets, underpinned by high ethical standards and to prevent abuse in markets regulated by the Reserve Bank, the Reserve Bank of India (Prevention of Market Abuse) Directions, 2019 have been put in place, in line with the best global practices.
  • To promote the highest standards of governance and conduct in Over-The-Counter (OTC) interest rate, foreign exchange and credit derivatives markets, the Master Direction – Reserve Bank of India (Market-makers in OTC Derivatives) Directions, 2021 set out the regulatory framework for product suitability and user appropriateness, governance arrangements and risk management for OTC derivative transactions. 

Broad Regulatory Framework and Instruments

Market Infrastructure

Looking Ahead

Financial markets play an important role in the growth and development of an economy by facilitating efficient allocation of resources and sharing of risks. Given its significance, the development of financial markets has always remained one of the key priorities of the Reserve Bank. Accordingly, the Reserve Bank has been undertaking policy reforms and regulatory policies in active coordination with Government and other stakeholders to develop safe and stable financial markets which facilitate efficient price discovery through increasing the depth and width of financial markets and provide appropriate products for trading and risk management. As part of this approach, it seeks to broad base markets by easing access, enhancing participation, facilitating innovation, protecting users and promoting fair conduct.