RBI has Proposed Changes to Banks Forex: The RBI has proposed changes to banks’ foreign exchange position rules, aligning net open position norms with Basel standards to improve risk measurement and ensure consistency.
The Reserve Bank of India (RBI) on Wednesday proposed changes to the rules governing banks’ foreign exchange positions.
According to an official statement, the revisions to the Net Open Position (NOP) have been made after a comprehensive review of the existing instructions.
The NOP represents the difference between a bank’s total foreign currency assets and liabilities, indicating its exposure to currency fluctuations or exchange rate risk.
The RBI said the proposed guidelines are more closely aligned with the Basel Committee on Banking Supervision (BCBS) standards.
The RBI also said it will ensure consistent implementation across regulated entities.
The amendments include eliminating separate offshore/onshore NOP calculations and incorporating surplus deposits from foreign operations into the NOP.
It also proposes retaining the forex risk capital charge on the actual NOP and modifying the shorthand method for calculating the NOP in alignment with Basel guidelines, which treats open positions in gold separately.
The central bank also stated that there is a provision to exempt certain structural forex positions from the NOP.