RBI Amendments Report – 24th Jun 2026 | Net Open Position – Revised Instructions

I. Integration of Offshore & Onshore NOP

The historical practice of maintaining separate calculations for domestic and international branch forex positions is abolished. Entities must now calculate a single, consolidated global NOP.

II. Inclusion of Accumulated Surplus of Overseas Operations

Retained earnings and accumulated surpluses parked in foreign branches must now be factored into the overarching NOP calculation, closing a previous gap in actual forex exposure.

III. Capital Charge on Actual NOP

Capital charges for forex risk must now be maintained on the actual NOP at the close of business, rather than relying on theoretical limits or static approximations.

IV. Modification of Shorthand Method & Separation of Gold

Aligning with BCBS, the “Shorthand method” for measuring multi-currency risk is updated. Crucially, Gold is no longer bundled with standard forex currencies; it requires a separate open position calculation.

V. Exemption of Structural Forex Positions

Certain non-trading, long-term strategic currency positions (structural positions) are exempt from daily NOP calculations, provided they are held to protect the capital adequacy ratio from exchange rate movements.

1. Commercial Banks

Ref: Commercial Banks – Prudential Norms on Capital Adequacy (Tenth Amendment)

Applicability: All Scheduled Commercial Banks (SCBs) excluding RRBs.

Management Action Plan:

• IT Integration: Overhaul Treasury Management Systems (TMS) to consolidate live data streams from overseas branches and domestic centers by Q3 2026.
• Policy Revision: Rewrite internal NOP policies to identify and board-approve “Structural Positions” for exemption.
• Capital Allocation: Update the ALM (Asset Liability Management) models to calculate daily risk capital charges strictly on actual EOD (End of Day) positions.

2. Small Finance Banks (SFBs)

Ref: Small Finance Banks – Prudential Norms on Capital Adequacy (Seventh Amendment)

Applicability: All licensed SFBs.

Management Action Plan:

• Capacity Building: Train treasury staff on the revised Basel-aligned “Shorthand Method,” as SFBs generally have less complex forex books.
• Gold Disaggregation: SFBs dealing in gold/sovereign gold bonds must separate gold exposure from general currency exposure in their capital reporting templates immediately.

3. Local Area Banks (LABs)

Ref: Local Area Banks – Prudential Norms on Capital Adequacy Amendment

Applicability: Existing Local Area Banks.

Management Action Plan:

• Exposure Audit: Given their localized nature, LABs must audit indirect forex exposures or minimal Nostro account balances to ensure compliance.
• Reporting Adjustments: Update quarterly regulatory reporting formats to reflect the “Actual NOP” capital charge requirement, even if the charge is negligible.

4. Regional Rural Banks (RRBs)

Ref: Regional Rural Banks – Prudential Norms on Capital Adequacy (Third Amendment)

Applicability: All RRBs operating under NABARD supervision.

Management Action Plan:

• Sponsor Bank Alignment: Coordinate with sponsor commercial banks to align NOP calculation methodologies, as RRB forex transactions are often routed through sponsors.
• System Parameter Updates: Adjust Core Banking Systems (CBS) to prevent the offsetting of non-exempt structural positions.

5 & 6. Urban and Rural Co-operative Banks (UCBs & RCBs)

Ref: UCBs (Third Amendment) and RCBs Amendment Directions

Applicability: Tier-2 to Tier-4 UCBs, State Co-operative Banks, and District Central Co-operative Banks holding Authorized Dealer (AD) licenses.

Management Action Plan:

• Board Sanctions: Boards must pass resolutions formally defining their ‘structural forex positions’ to claim exemptions, heavily documenting the intent.
• Vendor Upgrades: Co-operative banks relying on third-party ASPs (Application Service Providers) for treasury software must initiate vendor change requests immediately to ensure the software splits Gold calculation from the Shorthand method before the 2027 deadline.

7. All India Financial Institutions (AIFIs)

Ref: AIFIs – Prudential Norms on Capital Adequacy (Fourth Amendment)

Applicability: NABARD, SIDBI, EXIM Bank, NHB, and NaBFID.

Management Action Plan:

• Surplus Repatriation Mapping: AIFIs (especially EXIM) must conduct a thorough valuation of accumulated surpluses in overseas operations and immediately recalculate their baseline NOP.
• Capital Optimization: Recalibrate capital adequacy ratios considering the shift from limits-based to actual-NOP-based capital charges. Optimize daily open positions to minimize idle capital.

8. Standalone Primary Dealers (SPDs)

Ref: Standalone Primary Dealers (Second Amendment)

Applicability: Non-bank entities authorized as primary dealers.

Management Action Plan:

• Algorithmic Trading Adjustments: SPDs engaging in forex forward/swap markets must reprogram algorithmic trading risk limits to prevent intra-day breaches of the newly integrated onshore/offshore NOP ceilings.
• Gold Book Segregation: SPDs must establish physically and logically distinct trading books/ledgers for Gold to comply with the modified Shorthand Method requirements.

Strategic Roadmap Forward

While the implementation date is April 1, 2027, the systemic nature of these changes requires immediate action. Regulated entities should form cross-functional task forces (comprising Treasury, Risk, Compliance, and IT) by Q3 2026. Early commencement of parallel runs using both the old and new calculation methodologies is highly recommended to prevent capital shocks upon the effective date.