Risk Management and Inter-Bank Dealings - Foreign Exchange Risk Reserve

RBI/2026-27/292 A.P. (DIR Series) Circular No. 26 October 10, 2026 To, All Authorised Dealers Madam/Sir, Risk Management and Inter-Bank Dealings - Foreign Exchange Risk Reserve Attention of Authorised Dealers is invited to the Master Direction - Risk Management and Inter-Bank Dealings dated July 05, 2016 , as amended from time to time. 2. With a view to ensuring the orderly functioning of the foreign exchange market, it has been decided that: Authorised Dealers shall be required to maintain a Foreign Exchange Risk Reserve (FERR) for foreign exchange derivative contracts involving INR undertaken with users; The Reserve shall be applicable to all foreign exchange derivative contracts involving INR of notional value exceeding USD two million equivalent undertaken for the purpose of hedging current account transactions where the user is purchasing foreign currency against INR; This Reserve shall be equal to 20 per cent of the INR equivalent of the notional amount of each derivative contract; and This Reserve shall be deposited and maintained by way of cash in India with the Reserve Bank on a daily basis and shall be maintained until the termination of the contract. 3. Any attempt by us

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