RBI Deputy Governor Rohit Jain recently spoke at the Annual Day of the Foreign Exchange Dealers’ Association of India (FEDAI). He outlined a clear vision for the future of India’s foreign exchange (forex) market. He stated that the market must become deep enough to handle global shocks and flexible enough for new types of trade. Most importantly, he said the market must be fair enough to serve the smallest users with the same respect as large corporate clients.

Mr. Jain noted that while India has made progress in market stability and discipline, there is still work to be done in making forex services accessible to everyone. He explained that the success of future reforms will not be measured by how many new products are launched. Instead, success will be judged by the speed, transparency, and quality of service that regular citizens receive when they need foreign exchange.

A major focus of the speech was the use of the Indian Rupee in international trade. The RBI has already introduced the Special Rupee Vostro Account (SRVA) framework. This allows trade to be settled in Rupees instead of foreign currencies like the Dollar. Mr. Jain told bankers that opening these accounts is the easy part. The real challenge is finding trade routes with two-way flows, building strong relationships with foreign banks, and offering competitive rates to customers. Using local currency helps reduce costs and avoids risks related to currency fluctuations.

The Deputy Governor pointed out a specific weakness in the current system regarding Public Sector Banks (PSBs). He observed that PSBs have strong relationships with small businesses (MSMEs) outside big cities, yet they do not participate enough in forex derivatives (contracts used to protect against price changes). Currently, large companies dominate the market, while smaller clients who need protection from currency risks remain on the sidelines. He urged PSBs to increase their participation and move towards electronic trading platforms.

Mr. Jain also discussed recent market volatility. In March and April, the RBI had to take steps to stop unhealthy trading activities between local markets and offshore markets (NDF markets). He advised that as India integrates more with global markets, banks should not be afraid. Instead, they must strengthen their risk management and internal oversight. He suggested that having strong rules is not enough; banks must use better judgment and follow clear standards to protect the system.

Finally, the Deputy Governor called on FEDAI to take a leadership role. He wants the association to help its member banks set common standards for professional behavior. For bank officers and aspirants, this means the future of Indian banking will require a deep understanding of forex risk, a focus on digital platforms, and a commitment to helping small-scale exporters and importers access global markets safely. The RBI expects banks to rise to the occasion and make Rupee-based trade a global reality.