Key highlights
On October 10, 2026, the RBI opened a dollar window for three oil companies and tightened rupee derivative rules: no rebooking, a $5 million threshold, 20% AD reserves. Check with your AD.
- Oil window: From October 12, the RBI will sell dollars to Indian Oil, HPCL and BPCL to meet their entire daily requirement. Other importers aren’t covered.
- Rebooking ban: ADs can’t allow rebooking of rupee derivative contracts cancelled after the directions. Rollover at maturity is still allowed.
- Lower threshold and undertaking: The limit for hedging without establishing the underlying exposure falls from $100 million to $5 million, and ADs must collect a declaration that the same exposure isn’t hedged with another AD.
- 20% reserve: On qualifying contracts above $2 million that hedge current-account exposure, the AD, not the importer directly, must hold a cash reserve equal to 20% of the rupee value.
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RBI forex rules 2026 - On Saturday, October 10, the Reserve Bank of India announced two sets of foreign-exchange measures. One creates a special dollar-sourcing window for three public-sector oil marketing companies. The other changes requirements for certain foreign-exchange derivatives involving the Indian rupee.
The measures have different scopes. The dollar facility names three companies; it is not a general facility for every importer. The derivative directions concern specified INR-linked transactions and impose several obligations on authorised dealer (AD) banks. Businesses should review their own instruments and documentation with their AD rather than assume every measure applies to every foreign-currency payment or hedge.
A dollar window for three oil marketing companies
The RBI will meet the full daily dollar requirements of Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited by selling US dollars to them through designated banks. The facility takes effect on October 12, 2026, and continues until further notice.
This is a targeted arrangement for the three named public-sector oil marketing companies. The RBI announcement does not extend it to other importers, private-sector energy companies or businesses with foreign-currency obligations.
Changes to INR-linked foreign-exchange derivatives
In a separate announcement, the RBI outlined changes to certain INR-involving derivative contracts. The operative directions are in A.P. (DIR Series) Circular Nos. 25 and 26.
Restrictions on rebooking cancelled contracts
ADs must not allow users to rebook an INR-involving foreign-exchange derivative contract, whether deliverable or non-deliverable, if it was cancelled with an AD after the directions were issued. The RBI says rollover of a contract at maturity remains permitted, subject to existing regulatory requirements. In other words, rebooking a cancelled contract and rolling over a maturing one are treated differently.
A lower threshold for specified positions without establishing exposure
The RBI reduced the threshold for specified foreign-exchange derivative transactions used to hedge contracted exposures without establishing the underlying exposure from US$100 million to US$5 million equivalent, across all ADs. The corresponding threshold for positions in exchange-traded INR currency derivatives without establishing an underlying exposure is also US$5 million equivalent, counted across recognised stock exchanges.
This should not be described as a US$5 million cap on all corporate hedging. It concerns the threshold for specified transactions without establishing the underlying exposure. Companies should confirm with their AD how the revised threshold applies to their products and aggregate positions.
An undertaking against duplicate hedging
For INR-involving derivative contracts used to hedge contracted exposures, ADs must obtain and retain an undertaking from the user confirming that the same underlying exposure has not been hedged with another AD. Businesses that use several banks should check how exposures are identified and recorded so that declarations remain consistent.
A Foreign Exchange Risk Reserve for certain contracts
The RBI also introduced a Foreign Exchange Risk Reserve (FERR). It applies to INR-involving foreign-exchange derivative contracts with a notional value above US$2 million equivalent when they are used to hedge current-account exposures and the user buys foreign currency against the rupee. The AD must maintain a cash reserve with the RBI equal to 20% of the INR equivalent of each qualifying contract’s notional amount.
The reserve requirement is imposed on the AD, not as a direct 20% cash deposit requirement on every importing business. A company with a potentially qualifying hedge should ask its bank how the direction affects its transaction process, liquidity arrangements or pricing. The US$2 million FERR threshold is separate from the US$5 million threshold described above; they relate to different requirements.
What businesses should review
Companies using INR-linked derivatives can start by listing their relevant contracts, including deliverable, non-deliverable and exchange-traded positions. They should review cancellation and maturity procedures with each AD, check that exposure documentation and undertakings are consistent across banks, and ask which of their contracts meet the FERR conditions. Businesses should also have their AD confirm how the directions apply to specific products and transactions.
The RBI described the measures as intended to support the orderly functioning of the foreign-exchange market. Their practical effect on an individual business depends on the instrument, underlying exposure and transaction structure. This is general information, not legal or financial advice; consult your AD and professional advisers about a specific position.
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