The Reserve Bank of India announced a package of foreign-exchange measures on 10 October as it sought orderly market functioning. It introduced a Foreign Exchange Risk Reserve (FERR) for specified rupee-linked derivative contracts and separately opened a special dollar-supply window for Indian Oil, Hindustan Petroleum and Bharat Petroleum.
Under the FERR circular, authorised dealers must maintain cash with the RBI equal to 20% of the INR value of covered derivative contracts above USD 2 million when a user is hedging a current-account exposure by purchasing foreign currency against rupees. The RBI also cut the threshold for certain derivative transactions without establishing underlying exposure from USD 100 million to USD 5 million and restricted rebooking of cancelled rupee derivatives.
The special oil-company facility takes effect from 12 October and is intended to meet the entire daily dollar requirements of the three public-sector OMCs through designated banks. Moving a large source of dollar demand away from the general spot market can reduce immediate market pressure, but it does not remove the underlying effects of oil prices, capital flows or the broader balance of payments.
For civil-services preparation, the package illustrates the difference between monetary policy and foreign-exchange market management. The repo rate targets broader financial conditions, while these measures change how dollar demand and derivative risk are handled. FERR is a market-regulatory tool, not a new CRR imposed on all bank deposits.