RBI Eases Some Rules on Unhedged Forex Exposure

The Reserve Bank of India allowed banks to distribute the additional provisioning on unhedged foreign currency exposure equally in the current fiscal year instead of providing the entire amount in the June quarter, it said in a release on Tuesday.

However, it declined such a relaxation on overall capital requirements.

The RBI also clarified that incremental provisioning for unhedged forex exposures will be treated as general provisioning under Tier II capital.

Incremental provisioning on such exposures would require banks to provide 10 basis points over and above standard asset provisioning, the RBI said.

Copyright: Thomson Reuters 2014