RBI Revises Net Open Position Framework

Press Release: 2026-2027/529, Dated 24-06-2026

The Reserve Bank of India (RBI) has issued amendment directions on ‘Net Open Position – Revised Instructions’ to amend the existing framework for the computation of Net Open Position (NOP) by banks. The amendments seek to rationalise the computation methodology, remove separate onshore/offshore calculations, and align the framework more closely with Basel Committee on Banking Supervision (BCBS) standards.

The revised instructions are aimed at improving consistency, simplifying regulatory computation and ensuring better recognition of structural foreign exchange positions.

1. Separate Offshore and Onshore NOP Calculation Removed

The amendments do away with the requirement to separately calculate offshore and onshore Net Open Position.

This change is intended to simplify the computation framework and provide a consolidated approach for assessing foreign exchange open positions.

2. Inclusion of Accumulated Surplus of Overseas Operations

RBI has provided for the inclusion of the accumulated surplus of overseas operations in the computation framework.

This ensures that relevant surplus arising from overseas branches or operations is appropriately recognised while determining the bank’s net open position.

3. Alignment of Shorthand Method with Basel Guidelines

The amendments also revise the Shorthand method used to compute NOP.

The revised approach seeks to align the Shorthand method with applicable Basel guidelines, thereby promoting consistency with global prudential standards.

4. Exemption for Certain Structural Forex Positions

RBI has exempted certain structural foreign exchange positions from the computation of NOP.

Structural forex positions generally arise from long-term capital or investment-related exposures and are not intended for trading or short-term currency gains. Their exclusion helps ensure that NOP computation better reflects actual open market risk.

5. Greater Alignment with BCBS Standards

The revised instructions seek to ensure greater alignment with standards issued by the Basel Committee on Banking Supervision (BCBS).

This alignment is expected to improve the comparability and robustness of India’s prudential framework for managing foreign exchange risk.

6. Objective of the Amendments

The amendments aim to:

• Simplify the computation of Net Open Position;
• Remove separate offshore and onshore NOP calculations;
• Recognise the accumulated surplus of overseas operations;
• Align the Shorthand method with Basel guidelines;
• Exempt specified structural forex positions from NOP; and
• Strengthen consistency with BCBS standards.

7. Expected Impact

The revised framework is expected to simplify compliance for banks while improving the prudential treatment of foreign exchange exposures. It will also help banks compute their NOP more consistently and globally aligned, particularly in cases involving overseas operations and structural forex positions.

8. Key Takeaway

RBI has amended the Net Open Position – Revised Instructions to rationalise the computation of Net Open Position (NOP). The amendments remove separate offshore/onshore NOP calculations, provide for the inclusion of the accumulated surplus of overseas operations, align the Shorthand method with Basel guidelines, exempt certain structural forex positions from NOP, and ensure greater alignment with BCBS standards.

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