Mumbai: The Reserve Bank of India (RBI) on Tuesday allowed non-deposit taking non-banking finance companies (NBFCs) with asset size of 1,000 crore and above to participate in interest rate futures.

“The position limits for various categories of participants in the interest rate futures market shall be subject to the guidelines issued by the Securities and Exchange Board of India (Sebi)," the central bank said in a notification on its website. Interest rate futures allow bond holders to hedge their interest rate risk by buying contracts for a future date. The profit or loss can be then settled in cash.