RBI Guidelines for Foreign Exchange Risk Reserves
The Reserve Bank of India has updated requirements for how banks manage and report their foreign exchange risk reserves.
- Document
- Notifications
- Dated
- 10 Oct 2026
- Effective
- 2026-10-10
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
- Banks must maintain specific reserves against foreign exchange risks.
- These rules apply to all Authorized Dealer Category-I banks.
- Internal risk management policies must align with these new requirements.
In short
This Reserve Bank of India (RBI) notification clarifies how banks must handle their Foreign Exchange Risk Reserve, which is a financial safety buffer against currency fluctuations.
What has changed
How it worked before
Banks previously followed existing risk management frameworks for foreign exchange dealings without these specific updated reserve instructions.
What has changed
The RBI has introduced updated guidelines for maintaining these reserves on bank balance sheets to better manage potential losses from currency trading.
Who this affects
Authorized Dealer Category-I banks, which are banks licensed by the RBI to deal in foreign currency.
What you should do
If you manage a bank, review your internal risk management policies to ensure your reserve calculations meet the new RBI standards.
If you do nothing
Failure to comply with RBI directives can lead to regulatory audits, financial penalties, or restrictions on your bank's foreign exchange operations.
The terms explained
- Authorized Dealer Category-I banks
- These are banks specifically licensed by the Reserve Bank of India to buy and sell foreign currency for their customers.
- Foreign Exchange Risk Reserve
- A pool of money set aside by a bank to cover potential losses caused by changes in currency exchange rates.
The original document
| Issued by | RBI |
|---|---|
| Document | Notifications |
| Full title | Risk Management and Inter-Bank Dealings - Foreign Exchange Risk Reserve |
| Issued on | 10 October 2026 |
| Effective | 2026-10-10 |
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