RBI Allows Exclusion of FCNR(B) ECB and Swap Positions from NOP-INR Limits

RBI/2026-27/101 A.P. (DIR Series) Circular No. 13, Dated, 08-06-2026

The Reserve Bank of India (RBI) has clarified that Authorised Dealer (AD) Category-I banks may exclude certain swap positions from the computation of their Net Overnight Open Position (NOP)-INR limits under the recently introduced forex swap facilities.

The clarification is intended to facilitate the efficient implementation of the RBI’s measures announced on 08 June 2026 and simplify foreign exchange position management for banks.

1. Exclusion Permitted for Specified Swap Positions

Under the clarification, AD Category-I banks may exclude swap positions arising from:

• Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits;
• External Commercial Borrowings (ECBs); and
• Overseas Foreign Currency Borrowings (OFCBs)

from the calculation of their NOP-INR limits for the purposes of the swap facilities introduced by the RBI.

2. Relief Under the New Swap Framework

The exclusion applies to swap transactions undertaken under the RBI’s recently announced forex swap arrangements, including facilities introduced to encourage:

• FCNR(B) deposit mobilisation;
• External Commercial Borrowings; and
• Overseas foreign currency funding.

The relaxation is designed to ensure that banks can utilise the swap facilities without adverse implications for their NOP-INR utilisation.

3. Existing Regulatory Limits Continue to Apply

The RBI has clarified that the exclusion from NOP-INR calculations does not dilute compliance obligations under other regulatory frameworks.

Accordingly, banks must continue to comply with:

• Applicable provisions of the Foreign Exchange Management Act (FEMA);
• RBI prudential norms; and
• Existing exposure and risk management limits prescribed by the RBI.

4. Impact on Banks

The clarification is expected to:

• Simplify foreign exchange position management;
• Improve operational flexibility under the swap facilities;
• Reduce constraints arising from NOP-INR limits;
• Facilitate mobilisation of FCNR(B) deposits and foreign currency borrowings; and
• Support effective liquidity and treasury management.

5. Significance of the Clarification

The RBI’s recent measures, including the FCNR(B) swap facility and swap arrangements for ECBs and overseas borrowings, are aimed at attracting foreign currency inflows and strengthening external sector resilience.

By permitting exclusion of related swap positions from NOP-INR calculations, the RBI has addressed a key operational concern that could otherwise limit banks’ participation in the scheme.

6. Objective of the Measure

The clarification seeks to ensure smooth implementation of the RBI’s foreign exchange mobilisation initiatives while maintaining the overall prudential framework governing foreign exchange exposures.

By easing NOP-INR treatment for eligible swap positions, the RBI aims to encourage greater utilisation of swap facilities, support foreign currency inflows, and enhance flexibility in the treasury and risk management operations of AD Category-I banks.

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