RBI clarifies interbank trades, ECBs coupons not part of FERR
Economic Times 1 hr ago·15 Oct 2026, 3:14 pm
The Reserve Bank of India has clarified that the foreign exchange risk reserve (FERR) requirement does not apply to banks that are market makers or engage in proprietary trading. This specific clarification is intended to prevent the burden of the reserve from becoming a barrier to normal banking activities.
For investors, this is a positive development as it reduces the operational costs and regulatory complexity for banks. It ensures that the FERR requirement is targeted at genuine hedging activities rather than general market operations, which could otherwise impact profitability.
Moving forward, investors should monitor how banks adjust their capital allocation strategies in response to this regulatory clarity. It will be important to see if this leads to more stable earnings reports for the banking sector.
Excerpt from Economic Times
Reserve Bank of India recently clarified the applicability of foreign exchange risk reserve for banks. The requirement does not apply to banks engaging in market-making or proprietary trading. It will also not affect interest on External Commercial Borrowings or dividends payable to non-resident investors. The FERR…Read the original at Economic Times
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Key takeaways
- Concerns Bank OF India (BANKINDIA).
- Category: Orders & Deals.
- Flagged as a high-impact, market-moving story.
Why it matters
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