RBI Update - Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026

The Reserve Bank of India has issued the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026, effective from 1 April 2027, revising the framework for computation of Net Open Position (NOP) and capital charge for foreign exchange risk to align with international standards and ensure consistent implementation across AIFIs. The amended directions require AIFIs to compute NOP and maintain foreign exchange risk capital charges at both standalone and consolidated levels on a continuous basis, while excluding specified positions such as regulatory capital deductions, certain capital instruments and non-performing or matured unpaid securities. The framework also introduces provisions permitting the exclusion of eligible structural foreign exchange positions, including investments and accumulated surpluses in overseas branches, subsidiaries, joint ventures, associates, IFSC Banking Units and Offshore Banking Units, subject to prescribed conditions and supervisory oversight. Detailed guidelines have been provided for measuring currency exposures, treatment of derivative and gold positions, overseas operations, and portfolio-level foreign exchange risk. Further, the overall capital requirement for foreign exchange and gold exposures will continue to be 9% of the overall NOP determined using the prescribed shorthand method, in addition to capital requirements applicable to credit, interest rate and other risks.