New Delhi, Oct. 15 -- The Reserve Bank of India (RBI) has clarified the scope of its new Foreign Exchange Risk Reserve (FERR) requirement, specifying which currency derivative contracts attract the 20% reserve, how banks must calculate it and which transactions are exempt.

The clarification, issued through frequently asked questions (FAQs) on 15 October 2026, follows two RBI directions dated 10 and 12 October. The rules cover specified foreign exchange derivatives undertaken by authorised dealer banks with users, as well as certain derivatives banks enter into to hedge currency risks on their own assets and liabilities.

Under the RBI FAQs, foreign exchange derivative contracts undertaken by authorised dealers with users attract FERR onl...