[CHAPTER IIID
REGULATION OF TRANSACTIONS IN DERIVATIVES, MONEY MARKET INSTRUMENTS, SECURITIES, ETC.
45U. Definitions.—For the purposes of this Chapter,—
(a) “derivative” means an instrument, to be settled at a future date, whose value is derived from
change in interest rate, foreign exchange rate, credit rating or credit index, price of securities (also
called “underlying”), or a combination of more than one of them and includes interest rate swaps,
forward rate agreements, foreign currency swaps, foreign currency-rupee swaps, foreign currency
options, foreign currency-rupee options or such other instruments as may be specified by the Bank
from time to time;
(b) “money market instruments” include call or notice money, term money, repo, reverse repo,
certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of
original or initial maturity up to one year as the Bank may specify from time to time;
(c) “repo” means an instrument for borrowing funds by selling securities with an agreement to
repurchase the securities on a mutually agreed future date at an agreed price which includes interest
for the funds borrowed;
(d) “reverse repo” means an instrument for lending funds by purchasing securities with an
agreement to resell the securities on a mutually agreed future date at an agreed price which includes
interest for the funds lent;
(e) “securities” means securities of the Central Government or a State Government or such
securities of a local authority as may be specified in this behalf by the Central Government and, for
the purposes of “repo” or “reverse repo”, include corporate bonds and debentures.
45V. Transactions in derivatives.—(1) Notwithstanding anything contained in the Securities
Contracts (Regulation) Act, 1956(42 of 1956) or any other law for the time being in force, transactions in
such derivatives, as may be specified by the Bank from time to time, shall be valid, if at least one of the
parties to the transaction is the Bank, a scheduled bank, or such other agency falling under the regulatory
purview of the Bank under the Act, the Banking Regulation Act, 1949(10 of 1949), the Foreign Exchange
Management Act, 1999(42 of 1999), or any other Act or instrument having the force of law, as may be
specified by the Bank from time to time.
(2) Transactions in such derivatives, as had been specified by the Bank from time to time, shall be
deemed always to have been valid, as if the provisions of sub-section (1) were in force at all material
times.
45W. Power to regulate transactions in derivatives, money market instruments, etc.—(1) The
Bank may, in public interest, or to regulate the financial system of the country to its advantage, determine
the policy relating to interest rates or interest rate products and give directions in that behalf to all
agencies or any of them, dealing in securities, money market instruments, foreign exchange, derivatives,
or other instruments of like nature as the Bank may specify from time to time:
Provided that the directions issued under this sub-section shall not relate to the procedure for
execution or settlement of the trades in respect of the transactions mentioned therein, on the Stock
Exchanges recognised under section 4 of the Securities Contracts (Regulation) Act, 1956(42 of 1956).
(2) The Bank may, for the purpose of enabling it to regulate agencies referred to in sub-section (1),
call for any information, statement or other particulars from them, or cause an inspection of such agencies
to be made.
45X. Duty to comply with directions and furnish information.—It shall be the duty of every
director or member or other body for the time being vested with the management of the affairs of the
agencies referred to in section 45W to comply with the directions given by the Bank and to submit the
information or statement or particulars called for under that section.]