Banks seek clarification on implementation of RBI forex measures

Benchmarks Nifty22,997.35374.65FEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return8.52 % Invest NowFEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return18.82 % Invest NowEnter search text:

The Economic Times daily newspaper is available online now. Read Today's Paper

Banks seek clarification on implementation of RBI forex measures

Banks seek clarification on implementation of RBI forex measures

By Joel Rebello, ET BureauLast Updated: Oct 13, 2026, 12:32:00 AM ISTSynopsis

Indian lenders have requested clarification from the Reserve Bank of India regarding new currency-supporting measures. They seek guidance on calculating the foreign exchange risk reserve and its impact on liquidity ratios. Additionally, banks are uncertain about cost transmission to customers and how exposure limits are assessed. Clarifications on the treatment of cash reserves and their classification as high-quality liquid assets have also been requested.

Listen to this article in summarized format

Loading...×Mumbai: Indian lenders have, through an industry body, sought regulatory clarity on the modalities of implementing the latest currency-supporting measures. These include the formula to calculate the newly introduced 20% foreign exchange risk reserve (FERR), the impact of the steps on liquidity ratios, and the methodology to be followed while passing on the costs to customers.

“The new rules have set a notional value limit of $2 million on all foreign exchange derivative contrasts, but there is still lack of clarity on how this will be implemented,” said a person aware of the letter by the Foreign Exchange Dealers’ Association (FEDAI) to the central bank.

There are specifics on which bankers need clarity.

Also read: Banks may explore easier forex hedging amid RBI curbs

“For instance, if a client takes a $2-million exposure through two different banks, he is technically within the limit at both, but above the limit on a gross basis. How should banks calculate that and which bank should maintain the FERR?” asked the person cited immediately above. “Even if it is with the same bank but the exposures are a few days apart, will that be treated as two separate exposures?”

Live Events

On Saturday, among the measures to dissuade speculative currency trades, the Reserve Bank of India (RBI) restricted the rebooking of cancelled contracts and imposed a 20% cash reserve requirement on forex derivative contracts above $2 million.

The RBI is likely to release its FAQ on the new measures soon.

After a meeting on Sunday, FEDAI members have sought clarification on the scope of FERR, the $2 million threshold, liquidity and balance sheet treatment, operational instructions on how the deposits will be maintained, implementation timeline and transition period and customer impact.

'Multiple Queries'

“Bankers have sought clarification on hedges of interest/coupon payments, including external commercial borrowing (ECB) interest,” said a second person aware of the details. “Clarifications have been sought on the classification of principal and interest payments relating to foreign-currency loans, ECBs, bonds, debt investments and investment income, as well as on the treatment of hedges on current account and capital account transactions.”

Banks have sought clarification on levy calculations if the import and export flows offset each other.

“The 20% levy will ultimately make import forward dollar purchases more expensive by 12 to 13 paise per month and about 150 basis points in terms of interest rates. Banks are still unclear on how all these calculations will work,” said a third person.

Banks have also sought clarification on whether the cash balance maintained with RBI as FERR would qualify as high-quality liquid assets (HQLA) and whether they would form part of the CRR or SLR the lender must statutorily maintain.

“Some banks have asked whether banks will be permitted to borrow against the FERR balance, including through repo, the Marginal Standing Facility (MSF) or any other RBI liquidity facility,” the first person cited above said.

Banks have overall sought more time to make the necessary system changes, establish controls, amend policies and procedures, update customer documentation and communicate the requirements internally and to customers.

“Some have sought a short transition period to complete implementation arrangements like a period of seven days to implement these guidelines,” said the second person aware of the details.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)
( Originally published on Oct 12, 2026 )Read More News onRBI forex measuresFERRforeign exchange risk reserveliquidity ratiosforeign exchange derivative contractsbanks liquidity requirementsFEDAI RBI clarificationmarginal standing facilityRBI newsRBI dollar

(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

...moreless
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onRBI forex measuresFERRforeign exchange risk reserveliquidity ratiosforeign exchange derivative contractsbanks liquidity requirementsFEDAI RBI clarificationmarginal standing facilityRBI newsRBI dollar

(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

...morelessPrime ExclusivesInvestment IdeasStock Report PlusePaperWealth Edition

• US mid-term elections – Part 2: What does it mean for Trump to lose control of Congress?

• The ABCD of the US mid-term elections – Part 1: Why it matters across the globe

• Curbing rupee bets: What the RBI’s new rules mean for the hedge-now-or-wait question

• Brinjal, buffalo, bacteria: Inside India’s pay-for-nature system

• Homebuyers wait as NCLT panel picks holes in unfinished Jaypee projects

• The NBFC saga - Part 3: How one default in 2018 changed the way RBI reads risk

• 1
• 2
• 3

View all StoriesContinue reading with one of these options:Limited AccessFreeLogin to get access to some exclusive stories
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET

Unlock Access to All Exclusives with ETPrime FREE TRIAL

15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers

Trial offer expiring in00 : 05 : 00

I'd rather pay ₹2599 now

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Prime Account Detected!

It seems like you're already an ETPrime member with

Login using your ET Prime credentials to enjoy all member benefits

Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.

Unlock ETPrime's Exclusive Stories Today!

Big Price Drop! Flat 40% Off

Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In now

Offer Exclusively For You

Save up to Rs. 700/-

ON ET PRIME MEMBERSHIP

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get Flat 40% Off

Then ₹ 1749 for 1 year

Avail Offer

Offer Exclusively For You

ET Prime at ₹ 49 for 1 month

Then ₹ 1749 for 1 year

Avail Offer

Special Offer

Get flat 40% off on ETPrime

Avail OfferAvail OfferClaim NowAlready a Member? Sign In now

Need Assistance?

Connect with an ETPrime expert for personalized support and guidance

+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '

' + h3 + '

' + h4 + '

' + listing + '

'; $('#paidSCWidget').html(html); var callback = $('#paidSCWidget').attr('data-callback'); if(callback && window[callback]) { window[callback](); } customDimension.dimension72 += ' | Shown SYFT no Trial_With Missed Paywalled Articles Collection'; } else { _processNormal() } } }); } else { _processNormal(); } } catch (e) { _processNormal(); } }, function () { _processNormal(); }); //console.log('storyCollectionLoad', $); }

What’s Included with

ETPrime Membership

1Exclusive Insights That Matter

Uncover the truth with our investigative stories

Make strategic moves using the real-world case studies

Read industry-specific stories to identify emerging trends

Spot opportunities with
in-depth insights that matter

• Trump temper on H-1B visas is forcing Indians to do these things to stay put in US

  What Adani’s US indictment means for India Inc’s overseas fundraising

• Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.

  Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?

• Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?

  The problem with lab grown diamonds

• Why a falling rupee is a better option for the economy

  A list of top 20 momentum stocks that have delivered massive returns in one year

2Invest Wisely With Smart Market Tools & Investment Ideas

Alpha Trade

Get daily trade ideas from SEBI-registered research analysts.

Investment Ideas

Grow your wealth with stock ideas & sectoral trends.

Stock Reports Plus

All-in-one stock research with Stock Score, peer comparison & key signals.

BigBull Portfolio

Get to know where the market bulls are investing to identify the right stocks.

Stock Analyzer

Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.

Market Mood

Analyze the market sentiments & identify the trend reversal for strategic decisions.

Stock Talk Live at 9 AM Daily

Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.

3Stay informed anytime, anywhere with ET ePaper

ePaper - Print View

Read the PDF version of ET newspaper. Download & access it offline anytime.

ePaper - Digital View

Read your daily newspaper in Digital View & get it delivered to your inbox everyday.

Wealth Edition

Manage your money efficiently with this weekly money management guide.

TOI ePaper

Read the PDF version of TOI newspaper. Download & access it offline anytime.

Deep Explainers

Explore the In-depth explanation of complex topics for everyday life decisions.

Health+ Stories

Get fitter with daily health insights committed to your well-being.

Personal Finance+ Stories

Manage your wealth better with in-depth insights & updates on finance.

5Enjoy Complimentary Subscriptions From Top Brands

Stream new documentaries from all across the world every day.

Stories you might be interested in