Important StoriesIMF raises India’s FY27 growth forecast to 7% on strong domestic demandRetail inflation jumps to 21 months high of 5.54% in SeptemberIRDAI may extend consultation, implementation timelines for distribution reformsPowered by AI, HCLTech net profit rises 21% y-o-y to ₹5,132 crore in Q2FY27GE Aerospace to nearly double India sourcing spend by 2030Follow UsFOLLOW US ON WHATSAPPHomeGO BACK TO HOME THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. RBI widens ambit of forex risk reserve requirement, tightens NDF rules The first set of new rules mandated that banks make a 20% cash deposit with the RBI for FX derivatives used by their clients to ​hedge current-account exposures By Reuters Updated - October 13, 2026 at 09:43 AM.×ShareWhatsAppXFacebookLinkedInMessengerRedditMailhttps://www.thehindubusinessline.com/money-and-banking/rbi-widens-ambit-of-forex-risk-reserve-requirement-tightens-ndf-rules/article71577809.eceCopy Highlights RBI expands 20 per cent cash reserve requirement to banks’ own FX hedges Non-deliverable rupee derivatives offered to clients restricted to ​hedging purposes only Higher hedging costs aim to curb demand ‌for rupee protection The Reserve Bank of India on Monday widened ⁠the scope of a recently introduced cash deposit requirement for FX hedges to cover all such transactions undertaken by authorised banks, including those ‌hedging their own assets and liabilities.

The move is the latest in a slew of measures announced by the ‌central bank since Saturday aimed at supporting the rupee, which ‌has ⁠been falling due to high oil prices ⁠and capital outflows.

The first set of new rules mandated that banks make a 20 per cent cash deposit with the RBI for FX derivatives used by their clients to ​hedge current-account exposures.

The central ‌bank has now widened its scope to cover all foreign exchange derivative contracts involving the rupee used by authorized banks purchasing foreign currency against the INR.

Bankers say that such ‌reserve requirements lift the cost of buying protection against ​further rupee weakness, which should help to slow a surge in hedging demand that has weighed on ⁠the South Asian currency.

Chinese authorities have previously used similar tools to discourage one-way bets against the yuan.

The RBI on Monday also ‌tightened rules governing banks' offering non-deliverable FX derivatives to their clients.

Banks with units in India's International Financial Services Centre and some primary dealers, which until now could offer non-deliverable rupee derivatives to non-resident users for any purpose, can now offer them only for hedging, the RBI said.

This includes non-deliverable forwards (NDFs), which ‌allow users to hedge or speculate on exchange-rate movements without exchanging the underlying ​currencies, with any profit or loss settled in cash, typically in dollars.

Limiting the scope for which such ⁠derivatives are used could dampen speculation on the rupee using such ⁠instruments.

The Indian rupee rose about 1 per cent on Monday after the central bank's weekend measures, which also included the ‌opening of a special window to supply Indian state-run oil refiners with their dollar needs directly from the central ​bank's foreign exchange reserves.

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