Banks Push RBI for Relief on Rupee-Defence Rules Amid Volatility

Banks urge RBI to revise 20% FX hedge deposit rule as rupee faces pressure. New measures aim to stabilize currency.

October 12, 2026 One Min Read

POLICY WIRE — New Delhi, India — Indian banks have requested the Reserve Bank of India to reconsider a key policy aimed at stabilizing the rupee, specifically the 20% cash deposit requirement for foreign exchange hedging. The move comes amid rising volatility and calls for clearer guidelines.

The central bank introduced new foreign exchange rules over the weekend to support the rupee, which has been under pressure due to global market conditions and high oil prices. Lenders are seeking an alternative to the current system, proposing a flat fee instead of the deposit to improve liquidity and reduce costs for businesses.

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While the measures are expected to provide short-term relief to the rupee, experts warn that long-term challenges remain. The RBI’s actions include supplying dollars directly to state-owned oil companies and restricting speculative currency trades, but these steps may not fully reverse the rupee’s downward trend.

Reporting by Policy-Wire (PW)

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