Reserve Bank of India consults on revised net open position methodology and foreign exchange risk capital charge

The Reserve Bank of India has published draft amendment directions proposing revisions to how regulated entities compute Net Open Position (NOP) and determine the capital charge for foreign exchange risk, updating requirements set out in its risk management and capital adequacy frameworks. The proposed changes are intended to improve alignment with Basel Committee on Banking Supervision standards and support consistent implementation across regulated entities. The draft revisions would remove separate offshore and onshore NOP calculations where applicable, include accumulated surplus of overseas operations in NOP where applicable, require forex risk capital charge to be maintained on the actual NOP, revise the Shorthand method in line with Basel guidelines including separate treatment of open positions in gold, and introduce a provision to exempt certain structural forex positions from NOP. The consultation covers draft amendments for commercial banks, small finance banks, regional rural banks, local area banks, urban and rural co-operative banks, all-India financial institutions and standalone primary dealers. Comments are invited from regulated entities, market participants and other interested parties until February 3, 2026.