meta_id 3266724

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Tenth Amendment Directions, 2026. The amended directions contain: New criteria for key calculations including the computation of Net Open Position (NOP) and the capital charge for foreign exchange risk at both group and standalone levels. Regulations prescribing capital requirements for foreign exchange risk, stipulating that a bank must calculate the NOP on a continuous basis at the close of each business day and exclude positions deducted from regulatory capital. Specific rules mandating the use of a shorthand method to measure foreign exchange risk in a portfolio, requiring banks to convert the nominal amount of net positions in each foreign currency and gold into the reporting currency at spot rates. Provisions outlining an exemption mechanism for structural foreign currency investments, entitling a bank to exclude these from the NOP calculation provided the exclusion neutralizes capital ratio sensitivity and is maintained for at least six months. Administrative measures detailing the capital charge calculation—such as applying a 9% capital requirement to the overall Net Open Position—and establishing a quarterly recalculation process for structural exemptions based on the CET1 ratio. Directives requiring banks to capture all open positions from onshore and offshore operations in the NOP calculation, and prohibiting the application of forex risk capital requirements to securities that are non-performing or matured and unpaid. The amendments take effect on April 1, 2027.