RBI Imposes USD 100 Million Cap on NOP-INR for Authorised Dealers Under FEMA, 1999

The Reserve Bank of India has issued a significant directive aimed at tightening foreign exchange risk controls for Authorised Dealers operating in the Indian market. Through A.P. (DIR Series) Circular No. 24 dated March 27, 2026, the RBI has established a definitive ceiling on the Net Open Position in Indian Rupee (NOP-INR) that Authorised Dealers may hold in the onshore deliverable market at the close of each business day.

This regulatory action reflects the central bank's continued focus on maintaining orderly conditions in the foreign exchange market and reducing systemic exposure arising from unchecked currency positions.

Background and Regulatory Framework

Master Direction on Risk Management and Inter-Bank Dealings

The foundation of this circular rests on the Master Direction – Risk Management and Inter-Bank Dealings dated July 05, 2016, which has been amended periodically to reflect evolving market realities. Under paragraph A (ii) (a) of Annex I of this Master Direction, the Reserve Bank retains the authority to prescribe limits on open positions involving the Indian Rupee — commonly referred to as NOP-INR — based on prevailing market conditions.

This built-in flexibility in the Master Direction has allowed the RBI to respond dynamically to shifts in foreign exchange market conditions, and the current circular represents one such exercise of that power.

Important: The authority to prescribe NOP-INR limits was always embedded within the existing framework. Circular No. 24 operationalises that authority by setting a concrete numerical cap in response to current market dynamics.

Key Directive: The USD 100 Million Cap

What Has Been Decided

The RBI has now mandated that all Authorised Dealers must ensure that their NOP-INR positions in the onshore deliverable market do not exceed USD 100 million at the end of each business day.

This cap applies specifically to positions held in the onshore deliverable market, drawing a clear boundary around the scope of the restriction. Authorised Dealers are required to monitor and adjust their positions on a daily basis to remain within the prescribed limit.

Compliance Deadline

Authorised Dealers are expected to achieve compliance at the earliest possible date, with a hard deadline of April 10, 2026. This gives institutions a brief but defined window to restructure their existing positions and align internal risk management systems accordingly.

The directions issued under this circular derive their authority from the following provisions of the Foreign Exchange Management Act, 1999 (42 of 1999):