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RBI Adjusts Foreign Exchange Risk Reserve
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Reserve Bank of Indiabankingforeign_exchange

RBI Adjusts Foreign Exchange Risk Reserve

October 10, 2026

RBI has modified the foreign exchange risk reserve requirements to ensure orderly market conditions amid evolving external sector dynamics.

RBI Modifies Foreign Exchange Risk Reserve Requirements

On October 10, 2026, the Reserve Bank of India issued a circular amending the risk reserve requirements under the Master Direction on Risk Management and Inter-Bank Dealings. The adjustment seeks to reinforce market stability amid increased volatility in the foreign exchange market.

While specific details were not fully provided in the notification, the change pertains to the reserve requirements for forward positions taken by Authorised Dealers, with the aim of curbing excessive speculation and ensuring adequate risk provisioning.

Implication for Practitioners: Forex desks and risk managers must reassess their position-taking strategies in light of revised reserve costs. Legal advisors should examine the impact on customer pricing and disclosure obligations in forward contract terms.

Citations

  • Master Direction - Risk Management and Inter-Bank Dealings, July 05, 2016, as amended
Practice Areas:bankingforeign_exchange

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