RBI Proposes New Forex Rules to Align with Global Standards

The Reserve Bank of India has proposed amendments to the rules governing banks' foreign exchange positions to better align with global standards. These changes include comprehensive revisions to the net open position (NOP) calculations, incorporating Basel Committee standards, and ensuring consistent implementation across regulated entities.

The Reserve Bank of India on Wednesday announced proposed changes to regulations concerning banks' management of foreign exchange positions. The amendments aim to make the net open position (NOP) rules more closely align with international standards set by the Basel Committee on Banking Supervision (BCBS), according to an official communication.

The NOP reflects the gap between a bank's total foreign currency assets and liabilities, indicating its susceptibility to currency exchange fluctuations. As part of the revisions, the central bank intends to eliminate the separate offshore/onshore NOP calculations and integrate accumulated surplus from overseas operations into NOP considerations.

Among other changes, the RBI plans to modify the calculation methods for maintaining forex risk capital charges, proposing to treat open positions in gold separately. The revisions also suggest exempting certain structural forex positions from NOP calculations, ensuring a uniform approach across all regulated entities.

(With inputs from agencies.)