RBI tightens forex risk norms, aligns capital rules with global standards

Mumbai: The Reserve Bank of India (RBI) Wednesday issued new banking rules on calculating capital charges for foreign exchange risk, seeking to align the country's currency risk governance with international standards. Banks must compute foreign exchange risk capital requirements on a continuous basis at both consolidated and standalone leve-ls, the central bank said in a draft report. The changes will come into effect from April 1, 2027.

The RBI has invited comments to the draft that amends provisions governing the calculations of net open positions and the associated capital charge for foreign exchange risk.

The banks will also be required to maintain capital for foreign exchange risk at the close of each business day. Additionally, the RBI has also allowed banks to exclude specific "structural" foreign exchange positions from the net open position, subject to strict conditions.


"The methodology shall be documented in the bank's risk management policy for structural foreign exchange positions," the RBI said.