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Mumbai: The Reserve Bank of India (RBI) late Wednesday tightened its foreign exchange regulations prohibiting banks from offering non-deliverable forward (NDF) contracts to clients, reinforcing measures taken late last week to support the rupee that last fiscal lost the most in 14 years against the US dollar. The new rules could dent banks and large corporate treasuries, experts said.The regulator said banks cannot offer NDF contracts involving the rupee, which lost nearly 10% in FY26, to resident or non-resident users. Banks and other authorised dealers are also not permitted to rebook any foreign exchange derivative contracts , whether deliverable or non-deliverable, with immediate effect.Banks have been barred from undertaking any foreign exchange derivative contract with their related parties too, effectively preventing them from palming off their losses to any related entities. The new norms are applicable with immediate effect, until further review, the RBI said."Banks can't offer NDF or offshore products to clients now, and all the arbitrage trades that clients were doing because of the price difference between the two markets will no longer be possible," said Anshul Chandak, head of treasury, RBL Bank. "There's also some ambiguity on related-party and operational processes, but this is a big hit for banks and large corporates treasuries.""The RBI is clear with its intent - buy dollars only if necessary - so that the rupee could appreciate toward 93/$. But directionally, the bias is toward a weaker rupee," said a trader at a PSU bank.The rupee was trading at 92.95/$ in the offshore markets as of 10:40 pm, a trader said.On Friday, the RBI had asked banks to cap their net open rupee positions in the onshore deliverable market to $100 million at the end of each business day effective April 10, far lower than the current 25% of total capital limits."With this (Wednesday) notification, the RBI is plugging a loophole that had allowed banks to get into deals with their corporate customers to reduce their losses after Friday's RBI directions that limited the net open rupee position to $100 million," said a senior treasury official, who declined to be named. "It means that the premium between the local and NDF market will go up when the market opens tomorrow."NDF contracts do not involve the exchange of underlying currencies, with parties instead settling the difference between the agreed rate and the market rate.On Monday, the first day of trading after the RBI guidelines were published Friday, the difference between the one-month onshore forwards and one-month offshore NDF had risen to about Rs 1.35 in the early part of trade. But the difference later narrowed to about 40 paise as banks got into deals with their corporate clients to prevent losses.To be sure, the central bank has so far not heeded calls by bankers to cushion the blow by bringing only prospective trades within the ambit of the new norms. The latest change by the RBI makes it more difficult for banks to prevent losses, bankers said.The latest regulatory curbs come amid efforts to curb speculative currency trading after the conflict pushed the rupee to a record low against the dollar.