Archive · 10 Oct 2026
RBI Opens Dollar Window for Oil Firms, Tightens Forex Rules
The Reserve Bank of India is creating a special way for three government-owned oil companies to get the dollars they need.
They use dollars to pay for oil bought from other countries.
The new arrangement starts on October 12 and will last until the RBI says otherwise.
It may mean the companies buy fewer dollars in the regular market, which could ease pressure on the rupee.
But the RBI will supply those dollars from its reserves, so those reserves could fall.
The RBI is also tightening rules for some currency contracts to limit risky or repeated trades.
Some eligible contracts will require banks to keep extra cash with the RBI.
These steps may help in the short term, but oil prices and money moving in and out of India can still affect the rupee.
Starting October 12, the RBI will meet the daily dollar needs of Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation through designated banks.
The facility is intended to remove the companies’ dollar demand from the spot market, but supplying dollars could reduce foreign exchange reserves.
The RBI cut the threshold for certain derivative transactions without established underlying exposure from $100 million to $5 million, including rupee-linked exchange-traded positions.
Banks cannot allow users to rebook certain cancelled rupee-linked contracts, although rollovers at maturity remain permitted under existing rules.
Eligible rupee-linked contracts exceeding $2 million require a cash foreign exchange risk reserve equal to 20% of their rupee value; dealers must also check that exposures are not hedged elsewhere.
- Who
- The Reserve Bank of India and three public-sector oil companies: Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation.
- What
- The RBI announced a special dollar-supply facility for the companies and tighter rules for certain foreign exchange derivatives.
- When
- Announced on Saturday, October 10; the oil-company facility begins October 12 and continues until further notice.
- Where
- India.
- Why
- The measures aim to ease pressure on the rupee and strengthen discipline and risk management in the foreign exchange market.
Potential benefits
Risks and limits
Dollar window and currency pressure
Potential benefits
Meeting oil companies’ dollar needs through a separate channel could reduce their demand in the spot market and ease near-term pressure on the rupee.
Risks and limits
The RBI’s dollar sales may reduce foreign exchange reserves, and broader pressures such as high crude prices, elevated US yields and foreign capital outflows remain.
Tighter derivatives rules
Potential benefits
Lower thresholds, limits on rebooking and checks against duplicate hedging are intended to support market discipline and risk management.
Risks and limits
The measures may affect transaction costs and market activity, while their ability to sustain rupee stability depends on wider market conditions.
- Facility start
- October 12
- Companies covered
- Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation
- Facility duration
- Until further notice
- Rupee closing rate
- 96.73 per dollar on Friday, compared with 96.79 in the previous session
- Derivative threshold
- Reduced from $100 million to $5 million for specified transactions without established underlying exposure
- Foreign exchange risk reserve
- Cash reserve equal to 20% of the rupee value of eligible contracts exceeding $2 million
- Foreign exchange reserves
- $734.60 billion after falling $12.95 billion in the week ended October 2
- Undisclosed details
- The RBI did not identify the designated banks or disclose the facility’s pricing mechanism or expected dollar supply.
