RBI Update - Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Tenth Amendment Directions, 2026

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