{
  "id": 14175629,
  "title": "RBI Tightens Forex Derivative Rules, Extends 20% Reserve Requirement To Banks' Own Rupee Hedges",
  "url": "https://urgent.news/2026/10/13/rbi-tightens-forex-derivative-rules-extends-20-reserve-requirement-to",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-13T10:05:30.000Z",
  "source": {
    "name": "Free Press Journal",
    "slug": "free-press-journal",
    "url": "https://www.freepressjournal.in/business/rbi-tightens-forex-derivative-rules-extends-20-reserve-requirement-to-banks-own-rupee-hedges"
  },
  "original_language": "en",
  "account": "The Reserve Bank of India (RBI) has strengthened foreign exchange derivative regulations and extended a 20% reserve requirement for banks holding rupee hedges. Unlike prior rules for customer transactions, these new measures do not impose a minimum contract value. The shift aims to curb dollar demand and bolster the rupee amid high oil prices and capital outflows. Authorized dealers must now keep a reserve equivalent to 20% of the notional value of eligible derivative contracts in cash, deposited daily at the RBI until the contract concludes. Previously, provisions covered derivatives used by banks to hedge current account exposures over $2 million. The RBI has also barred the use of these contracts by non-residents for purposes other than hedging. Separately, the central bank restricted non-deliverable derivative contracts offered to non-residents solely for hedging. This restriction applies to instruments provided exclusively through International Financial Services Centre (IFSC) Banking Units by Category-I banks. The revised rules apply to foreign exchange derivative contracts entered into post the issuance of the guidelines. These measures come after additional RBI restrictions introduced recently. On Saturday, the central bank launched a special facility to help state-run oil marketing companies meet their daily dollar needs, operational since Monday. Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation can utilize this facility to reduce reliance on spot-market dollar purchases. The RBI also lowered the threshold for hedging contracted exposures from $100 million to $5 million, alongside reducing the single position limit across rupee currency pairs and recognized exchanges. Additionally, users cannot rebook cancelled derivative contracts, and they must verify that the same exposure is not hedged elsewhere.",
  "summary": "The Reserve Bank of India (RBI) has expanded its foreign exchange risk reserve (FERR) requirement to cover rupee derivative contracts used by authorised dealers to hedge currency risks arising from their own assets and liabilities. Unlike the existing rules for customer transactions, which apply above a $2 million notional threshold, the revised directions prescribe no minimum contract value. The…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}