Reserve Bank of India (RBI) (Unhedged Foreign Currency Exposure) Directions, 2022
The Reserve Bank of India has, from time to time, issued several guidelines / instructions / directives to the banks on Unhedged Foreign Currency Exposure (UFCE) of the entities which have borrowed from banks.
2. We have received references from banks seeking clarification on various aspects including inter-alia clarity in the definition of ‘entities’ for which banks shall assess UFCE, exempted exposures / entities, alternative method for smaller entities, assessment of UFCE of entities incorporated outside India by overseas subsidiaries / branches of Indian banks etc.
3. Accordingly, a comprehensive review of the extant guidelines has been undertaken and all the existing instructions on the subject including the revisions / clarifications on the issues stated above have been consolidated in the Directions enclosed herewith. An Explanatory Note providing the background for these Directions is also enclosed.
Applicability
4. This circular is applicable to all commercial banks (excluding Payments Banks and Regional Rural Banks).
5. These instructions shall come into force from January 1, 2023.
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