RBI Revises Open Position Norms for AD Banks

A.P. (DIR Series) Circular No.16, Dated 23-06-2026

The Reserve Bank of India (RBI) has amended the framework governing the computation of Net Overnight Open Position (NOP)-INR limits for Authorised Dealer (AD) Category-I Banks. The amendment provides regulatory relief by permitting the exclusion of specified hedged positions arising under the RBI’s swap facility while calculating open position limits.

The revised framework is intended to facilitate the implementation of the RBI’s special swap facility without affecting banks’ regulatory open position limits.

1. Exclusion of Specified Hedged Positions Permitted

Under the amended framework, AD Category-I Banks may exclude certain hedged positions while computing their Net Overnight Open Position (NOP)-INR.

The exclusion applies only to positions arising from transactions covered under the RBI’s swap facility.

2. Transactions Covered Under the Exemption

The revised treatment applies to hedged positions relating to:

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

raised under the RBI’s swap facility.

These positions may be excluded from the computation of open position limits, subject to the prescribed conditions.

3. Compliance with Regulatory Requirements

The exemption is available only where the prescribed regulatory requirements are satisfied.

Accordingly, AD Category-I Banks must continue to comply with all applicable RBI and FEMA requirements governing the underlying transactions and exposure limits.

4. Objective of the Amendment

The amendment seeks to:

• Facilitate the implementation of the RBI’s swap facility;
• Provide regulatory flexibility to AD Category-I Banks;
• Ensure that eligible hedged positions do not distort open position calculations;
• Improve foreign exchange risk management; and
• Support the mobilisation of foreign currency resources.

5. Expected Impact

The revised framework is expected to ease the regulatory burden on AD Category-I Banks participating in the RBI’s swap facility by allowing eligible hedged positions to be excluded from NOP computations. This will enable banks to participate more efficiently in the swap facility while maintaining compliance with prudential exposure norms.

6. Key Takeaway

RBI has amended the framework for computing Net Overnight Open Position (NOP)-INR limits of Authorised Dealer Category-I Banks by permitting the exclusion of hedged positions arising from FCNR(B) deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs) raised under the RBI’s swap facility. The relaxation is subject to compliance with the prescribed regulatory requirements.

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