Exotic foreign-exchange derivatives are making a comeback in India, reflecting the central bank’s efforts to deepen the financial markets.
After the Reserve Bank of India’s allowed lenders to offer derivative products earlier this month, banks such as ICICI Bank Ltd. and Axis Bank Ltd. sold barrier forex options to customers including Reliance Industries Ltd. and Supreme Petrochem Ltd.
The return of exotic forex derivatives as well as the introduction of swaptions are part of efforts to give corporates more risk-management options as India’s global trade integration expands. Still, the authorities have tightened rules given that India had to ban derivative