Lenders have approached RBI via a forex industry body, seeking the removal of a mandate that banks make a 20% cash deposit with the RBI for FX derivatives used to hedge current-account exposures
Lenders have approached RBI via a forex industry body, seeking the removal of a mandate that banks make a 20% cash deposit with the RBI for FX derivatives used to hedge current-account exposures
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Banks have approached the Reserve Bank of India to request changes to the 20% cash deposit mandate. They propose that a flat charge replaces the deposit requirement for current-account hedging. This change could improve liquidity while ensuring cost transparency for businesses. Lenders also highlighted concerns over the $2 million threshold, which complicates hedge tracking. Clarity is needed regarding the deposit requirement for hedges related to interest payments on foreign loans.
