RBI Update - Reserve Bank of India (Regional Rural Banks - Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026

The Reserve Bank of India has issued the Reserve Bank of India (Regional Rural Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, effective from 1 April 2027, to strengthen and standardise the framework for computation of Net Open Position (NOP) and capital requirements for foreign exchange and gold exposures across Regional Rural Banks (RRBs). The amendment prescribes a detailed methodology for calculating NOP, requiring RRBs to monitor foreign exchange risk on a continuous basis at the close of each business day and include all foreign currency and gold positions held in both the banking and trading books. Certain positions, such as those deducted from regulatory capital and specified non-performing or matured unpaid securities, are excluded from NOP calculations. The Directions provide comprehensive guidance on the treatment of spot, forward, derivative, guarantee, future income and expense positions, and gold exposures, and require RRBs to determine overall NOP using the prescribed shorthand method based on aggregate net long or short currency positions and gold positions. Further, the NOP is required to be risk-weighted at 100%, with such capital requirement being in addition to capital requirements for credit and other applicable risks. The amended framework also aligns reporting, limit monitoring and NOP-INR requirements with the RBI’s Master Direction on Risk Management and Inter-Bank Dealings.