Hedging Requirement Analysis checks whether the borrower is exposed to price, currency, or interest-rate movements that can affect repayment capacity. MSMEs involved in imports, exports, commodity trading, or floating-rate borrowing may face sudden cost or revenue changes if exposures remain unhedged. For example, an importer with dollar payments but rupee sales may suffer if the rupee depreciates before payment is made. The analysis helps the lender decide whether hedging is required as a sanction condition, monitoring point, or risk mitigant. It matters because unhedged exposure can turn a profitable business into a stressed account during volatility. The caution is to avoid forcing unnecessary hedging; the decision should consider exposure size, natural hedges, tenure, cost, and borrower understanding.