Understanding RBI Foreign Exchange Risk Reserve Requirements
The Reserve Bank of India has released guidance to clarify how businesses must manage Foreign Exchange Risk Reserves.
- Document
- Press releases
- Dated
- 15 Oct 2026
- Effective
- 2026-10-15
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The Reserve Bank of India issued new guidance on foreign exchange reserves.
- These rules clarify requirements from circulars released in October 2026.
- Authorized dealers must review these answers to ensure they follow current mandates.
In short
This document provides official answers to common questions about the Foreign Exchange Risk Reserve (FERR). It exists to help businesses and banks understand the specific rules introduced in October 2026 regarding how they must hold reserves against currency risks.
What has changed
How it worked before
Previously, businesses relied solely on the text of circulars 26 and 27 to understand their reserve obligations.
What has changed
The Reserve Bank of India has now provided a simplified question-and-answer guide to clarify how those circulars apply in practice.
Who this affects
This affects authorized dealers and any business entity required to maintain a Foreign Exchange Risk Reserve.
What you should do
Visit the official Reserve Bank of India website to read the full list of frequently asked questions and ensure your current reserve practices match their guidance.
If you do nothing
If you do not follow the reserve requirements clarified in these documents, you may face regulatory scrutiny or penalties for non-compliance. The Reserve Bank of India may issue notices or restrict operations if your reserve levels do not meet the mandated standards.
The terms explained
- Foreign Exchange Risk Reserve
- A pool of money set aside to cover potential losses from changing currency values.
- Authorized Dealers
- Banks or financial institutions permitted by the central bank to trade in foreign currency.
The original document
| Issued by | RBI |
|---|---|
| Document | Press releases |
| Full title | RBI issues Frequently Asked Questions on Foreign Exchange Risk Reserve |
| Issued on | 15 October 2026 |
| Effective | 2026-10-15 |
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