RBI directs AD Cat-I banks to exclude hedged swap positions from NOP-INR computation
AD Cat-I banks must exclude hedged FCNR(B), ECB and overseas foreign-currency borrowing positions from NOP-INR computation
Change
On 23 June 2026, the Reserve Bank of India (RBI), in partial modification of A.P. (DIR Series) Circular No. 13 dated 8 June 2026, directed AD Category-I banks to exclude positions arising from hedged FCNR(B), External Commercial Borrowing and Overseas Foreign Currency Borrowing transactions when computing net overnight open position (NOP-INR), under Sections 10(4), 11(1) and 11(2) of FEMA, 1999.
Why it matters
Hedge-covered exposures from FCNR(B), ECB and overseas foreign-currency borrowing swaps are removed from the set of positions counted toward the net overnight open position limit, changing the base on which NOP-INR is measured. AD Cat-I banks must recompute net overnight open position under the amended scope while remaining compliant with A.P. (DIR Series) Circular No. 24 dated 27 March 2026 and the Master Direction – Risk Management and Inter-Bank Dealings.
Implications
- — AD Cat-I banks' treasury and market-risk teams must reconfigure NOP-INR calculation logic and position feeds to exclude hedged FCNR(B), ECB and overseas foreign-currency borrowing positions — a computation that still counts these positions does not conform to RBI's directed method.
- — AD Cat-I banks' regulatory-reporting and compliance teams must apply the exclusion in supervisory returns and internal NOP-INR reporting consistent with A.P. (DIR Series) Circular No. 24 (27 March 2026) and the Master Direction — returns built on the prior computation are non-conforming.
Who is affected
- — AD Cat-I banks' treasury and market-risk teams
- — AD Cat-I banks' regulatory-reporting and compliance teams