MUMBAI Jan 15 The Reserve Bank of India
announced new rules for setting incremental provisioning and
capital requirements for bank exposures to entities with
unhedged foreign currency exposures.
The provisioning rule requirements will be calculated as per
the ratio of likely loss due to foreign exchange movement to a
company's earnings before interest and depreciation (EBID), the
RBI circular said on Wednesday.
"These guidelines have been framed keeping in view the
domestic borrowers' vulnerability to the foreign currency
exposure," the central bank said.
Banks have to monitor unhedged forex exposures on a monthly
basis and calculate the incremental provisioning and capital
needs at least once a quarter. However, during periods of high
rupee volatility, it may be done at monthly intervals, the RBI
The new rules take effect from April 1.
(Reporting by Neha Dasgupta and Subhadip Sircar; Editing by