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

The Reserve Bank of India has issued the Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026, effective from 1 April 2027, to establish a uniform framework for the computation of Net Open Position (NOP) and capital requirements relating to foreign exchange and gold exposures across Rural Co-operative Banks (RCBs). The amendment introduces a detailed methodology for calculating NOP, requiring RCBs to monitor foreign exchange risk on a continuous basis at the close of each business day and include all foreign currency and gold-related assets, liabilities and off-balance sheet exposures in the calculation. Certain positions, including those deducted from regulatory capital and specified non-performing or matured unpaid securities, are excluded from NOP computation. The Directions prescribe the treatment of spot, forward, derivative, guarantee, future income and expense positions, and gold exposures, and require overall NOP to be determined using the 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 credit risk and other applicable capital requirements. The amendment also clarifies that risk weights on foreign exchange NOP are applicable only to Authorised Dealer RCBs, while other RCBs are required to consider only gold-related NOP, and mandates compliance with the RBI’s Master Direction on Risk Management and Inter-Bank Dealings for reporting, limit monitoring and NOP-INR requirements.