RBI Excludes Swap Positions on FCNR(B) and ECB from NOP-INR Compliance for AD Cat-I Banks

AD Cat-I banks may now exclude swap positions from FCNR(B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings raised under specific swap facility circulars when calculating their Net Open Position (NOP-INR). This relief is effective immediately from June 8, 2026.

What Changed

RBI’s A.P. (DIR Series) Circular No. 13 (RBI/2026-27/101) directs that swap positions arising from:

FCNR (B) deposits under the Swap Facility circular FMOD.MAOG.No.S-56/01.06.016/2026-27 dated June 8, 2026;
ECBs and Overseas Foreign Currency Borrowings under the Swap Facility circular FMOD.MAOG.No.S-57/01.06.016/2026-27 dated June 8, 2026

may be excluded when ensuring compliance with the NOP-INR limits set out in A.P. (DIR Series) Circular No. 24 dated March 27, 2026.

Who Is Affected

All Authorised Dealer Category-I banks in India that participate in the RBI swap facilities for FCNR(B) deposits and ECBs/overseas foreign currency borrowings. The circular does not extend to AD Category-II or other authorised persons.

Compliance Context

The NOP-INR (Net Open Position in INR) is a key prudential metric under FEMA that limits banks’ aggregate unhedged foreign currency exposure. By excluding specific swap positions, the RBI reduces the NOP impact of these liquidity-easing facilities, encouraging banks to utilise them without breaching their open position limits. Banks must still fully comply with the earlier March 27, 2026 circular on NOP-INR for all other transactions.

The circular is issued under Sections 10(4), 11(1), and 11(2) of FEMA, 1999, and is without prejudice to any other statutory approvals.

Operational Impact

Treasury and compliance teams at AD Cat-I banks should:

Update NOP-INR calculation models to segregate swap positions from the two specified swap facility circulars.
Document the exclusion methodology for audit and RBI inspection readiness.
Monitor the March 27, 2026 NOP-INR limits for all other exposures separately.

Practically, this means banks can now treat the swap leg of these facilities as neutral for NOP purposes — a favourable adjustment for balance sheet management during the current liquidity cycle.

Source: NOP-INR position of Authorised Dealer Category-I banks
Domain: rbi.org.in