The exchange has already received the approval of market regulator Securities and Exchange Board of India (Sebi) for launching IRFs.
"We will launch IRF trading on January 28," BSE MD and CEO Ashishkumar Chauhan told reporters here at a function organised by Association of National Exchange Members of India (ANMI).
Besides, NSE will begin live trading in the IRF on January 21, while MCX-SX said it will also go live this month without giving an exact date.
An IRF is generally a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds.
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The cash-settled IRFs will provide market participants with better option to hedge risks arising from fluctuations in interest rates, which depend on various factors, including RBI policy, demand for liquidity and flow of overseas funds.
The product would benefit banks, brokerage houses, insurance companies and primary dealers, among others.