Business · Markets · 1 hr ago
RBI restricts overseas rupee derivatives and expands 20% cash reserve rule
The Reserve Bank of India has tightened rules for rupee currency contracts as the currency faces pressure from high oil prices and money leaving the country.
Overseas clients can now use non-deliverable rupee derivative contracts only to hedge currency risks, not for other purposes.
These contracts are settled in cash, usually in dollars, without rupees changing hands.
The RBI has also extended a 20% cash reserve requirement to banks’ own rupee currency hedges.
Banks must deposit the reserve with the RBI each day and keep it until each contract ends.
The measures are part of a series of steps announced since Saturday to support the rupee, which had fallen more than 6% this year.
The rupee rose 1% on Monday after the RBI’s weekend announcements.
The Reserve Bank of India restricted overseas clients’ use of rupee non-deliverable derivatives to hedging.
The RBI also extended a 20% cash reserve requirement to banks’ own rupee currency hedges.
The reserve must be deposited with the RBI daily and held until each contract ends.
The measures are part of steps announced since Saturday to support the falling rupee.
The rupee rose 1% on Monday after the RBI’s weekend announcements.
- Who
- The Reserve Bank of India, banks and some primary dealers, and overseas clients using rupee derivatives.
- What
- The RBI restricted overseas use of non-deliverable rupee derivatives to hedging and expanded a 20% cash reserve requirement to banks’ own rupee hedges.
- When
- The RBI announced the measures on Monday; the article was published on October 13, 2026.
- Where
- India; the measures also cover banks with units in India’s International Financial Services Centre.
- Why
- The RBI said the measures are part of steps to support the rupee, which had been falling amid steep oil prices and capital outflows.
This story does not have two clearly opposing sides.
The RBI announced a series of measures aimed at supporting the rupee.
The RBI restricted overseas clients’ use of non-deliverable rupee derivatives to hedging and widened the 20% cash reserve requirement.
The rupee rose 1% after the RBI’s weekend announcements.
- Overseas use
- Non-deliverable rupee derivatives may be offered to non-residents only for hedging.
- Cash reserve
- 20% of the rupee equivalent of each contract’s notional amount.
- Deposit requirement
- Cash must be deposited with the RBI daily and held until the contract ends.
- Rupee movement
- Fell more than 6% this year; rose 1% on Monday.
- Causes of pressure
- Steep oil prices and capital outflows.
Sources
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