Forex fees accounted for an average 9 per cent of profit before tax (PBT) for private banks covered by the brokerage in FY26, compared with 5 per cent for public sector banks.

The RBI cut the threshold for forex derivative transactions without underlying exposure from $100 million to $5 million and barred rebooking cancelled rupee derivative contracts. A new 20 per cent foreign exchange risk reserve on eligible derivative contracts exceeding $2 million is expected to put pressure on banks' NIMs. The daily CRR maintenance floor will rise from 90 per cent to 99 per cent from October 16, restricting banks' flexibility to deploy funds in higher yielding short term assets. The RBI's dollar window for three PSU oil marketing companies could reduce banks' trading margins, while stricter forex documentation requirements are expected to raise operating costs.

RBI may hike rates in October, rate-hike cycle likely to remain shallow: Report

The Reserve Bank of India's measures to curb speculative currency positions and ease pressure on the rupee could weigh on banks' forex and treasury income while putting pressure on net interest margins (NIMs). Private sector banks are likely to face a bigger impact because forex fees account for a larger share of their profits and their treasury operations rely more heavily on derivatives and trading. Forex fees accounted for an average 9 per cent of profit before tax (PBT) for private banks covered by the brokerage in FY26, compared with 5 per cent for public sector banks . Treasury income contributed 16 per cent of PBT for PSU banks against 4 per cent for private lenders, but public sector banks rely less on proprietary trading and derivative structuring.

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