**Policy Summary: Reserve Bank of India (RBI) Circular on Unhedged Foreign Currency Exposure (UFCE)**
On February 17, 2021, the Reserve Bank of India (RBI) issued circular DOR.No.MRG.BC.4121.06.200202021 addressing capital and provisioning requirements for exposures to entities with Unhedged Foreign Currency Exposure (UFCE). This circular amends the guidelines outlined in circular DBOD.No.BP.BC.11621.06.200201314 dated June 3, 2014.
The original guidelines mandated that banks obtain UFCE information from entities quarterly via self-certification, preferably internally audited. This circular addresses concerns raised by banks regarding difficulties in obtaining UFCE certificates from listed entities for the most recent quarter due to disclosure restrictions during account finalization.
To address this, the RBI has decided that banks may use UFCE data from the immediate preceding quarter for calculating capital and provisioning requirements. All other instructions regarding UFCE remain unchanged.
The circular is applicable to all Scheduled Commercial Banks excluding RRBs.
For further information, contact Usha Janakiraman, Chief General Manager, Department of Regulation, Central Office, 12th-13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai – 400001. Tel No: 22661602, 22601000. Fax No: 022-2270 5670, 2260 5671, 2270 5691, 2260 5692. Website: www.rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India and the publisher of the policy document.
All Scheduled Commercial Banks Excluding RRBs: The entities to whom the circular is addressed.
Unhedged Foreign Currency Exposure: The subject of the circular regarding capital and provisioning requirements.
DBOD.No.BP.BC.11621.06.200201314: Reference to a previous circular related to Unhedged Foreign Currency Exposure (UFCE).
Mumbai, Maharashtra: Location of the Central Office Building of the Reserve Bank of India.
Usha Janakiraman: Chief General Manager at Reserve Bank of India, signatory of the circular.
Department of Regulation, Central Office: The department within the Reserve Bank of India responsible for the circular.
RRBs: Regional Rural Banks, which are excluded from this circular.
भारतीय �रजवर् ब�क
___________RESERVE BANK OF INDIA___________
www.rbi.org.in
RBI/2020-21/100
DOR.No.MRG.BC.41/21.06.200/2020-21
February 17, 2021
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir/Madam
Capital and provisioning requirements for exposures
to entities with Unhedged Foreign Currency Exposure
Please refer to our circular DBOD.No.BP.BC.116/21.06.200/2013-14 dated June 3, 2014
on capital and provisioning requirements for exposures to entities with Unhedged
Foreign Currency Exposure (UFCE).
2. The guidelines mandate that information on UFCE may be obtained by banks from
entities on a quarterly basis, on self-certification basis, and preferably should be
internally audited by the entity concerned. We have received representation from banks
expressing their inability in obtaining UFCE certificates from listed entities for the latest
quarter due to restrictions on disclosure of such information prior to finalisation of
accounts.
3. In view of this, it has been decided that in such cases, banks may use data pertaining
to the immediate preceding quarter for computing capital and provisioning requirements
in case of Unhedged Foreign Currency Exposures.
4. All other instructions remain unchanged.
Yours faithfully,
(Usha Janakiraman)
Chief General Manager
िविनयमन िवभाग, क�द्रीय काया�लय, 12वी ंऔर 13वी ंमंिज़ल, क�द्रीय काया�लय भवन, शहीद भगत िसंह माग�, मुंबई 400001
टेलीफोन /Tel No: 22661602, 22601000 फै�/Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
Department of Regulation, Central Office, 12th & 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691, 5692