RBI Proposes New Norms on Net Open Position

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  • Last Updated on 17 January, 2026

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PR No. 2025-2026/1925; Dated: 14.01.2026

1. Introduction

Reserve Bank of India (RBI) has issued draft amendment directions on the computation of Net Open Position (NOP) and the calculation of capital charge for foreign exchange (FX) risk, inviting public comments.

2. Objective Of The Draft Directions

The draft aims to strengthen the prudential framework for managing FX risk by ensuring consistent and comprehensive computation of net open positions. It seeks to align capital adequacy with the actual risk exposure arising from foreign exchange fluctuations.

3. Computation At Group And Consolidated Level

Under the proposed framework, banks are required to compute their net open positions and maintain capital charge for FX risk not only at the standalone level but also at the group or consolidated level, enhancing overall risk oversight.

4. Continuous Capital Requirement

The draft directions mandate that banks must meet capital requirements for foreign exchange risk on a continuous basis. This means compliance must be ensured at the close of each business day, rather than at periodic reporting intervals.

5. Conclusion

The proposed directions reflect RBI’s focus on strengthening risk management practices in the banking sector. Stakeholders may submit comments on the draft by February 3, 2026, after which the final framework is expected to be notified.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied