RBI permits banks to exclude structural foreign‑currency investments from NOP calculations
Bank treasury and forex trading desks can expand tradable net open positions only when eligible structural foreign‑currency investments are excluded from NOP calculations
Change
On 25 June 2026, RBI permitted banks to exclude eligible structural foreign‑currency investments — including capital investments and accumulated or unremitted earnings in overseas subsidiaries, branches, joint ventures and associates — from net open position (NOP) calculations on both a standalone and consolidated basis.
Why it matters
Excluding non‑dealing structural positions lowers reported NOP, creating headroom for larger trading positions within the same capital framework because forex risk capital charges will be maintained against actual NOP. Banks must demonstrate that excluded positions qualify as non‑dealing structural investments to obtain the measurement and capital benefit; gold positions remain measured separately.
Implications
- — Bank treasury and forex trading desks must update position‑limit and trading‑capacity calculations to reflect NOPs net of eligible structural foreign‑currency investments — failure to apply the exclusion where eligible preserves a higher reported NOP and reduces available trading headroom.
- — Bank risk and regulatory reporting teams must classify and hold documentation that capital investments and accumulated/unremitted earnings in overseas subsidiaries, branches, joint ventures and associates are non‑dealing to qualify for exclusion — absence of non‑dealing status prevents the exclusion.
- — Bank consolidated reporting and group finance teams must apply the exclusion on both standalone and consolidated NOP filings to ensure group‑level NOPs and forex capital charges align with the revised RBI treatment — inconsistent application will produce divergent regulatory and group reports.
Who is affected
- — Bank treasury and forex trading desks
- — Bank risk and regulatory reporting teams
- — Bank consolidated reporting and group finance teams