RBI Eases Intra-Day Forex Position Limits for AD Banks
Current · Source: Reserve Bank of India · RBI/2011-12/546 · issued 10 May 2012 · ~1 min read
Quick answerRBI has raised the intra-day open position limit for AD Category-I banks to five times their Net Overnight Open Position Limit or the existing approved intra-day open position limit, whichever is higher, for rupee-involved positions.
The rule, in the simplest words
The intra‑day limit for rupee trades can now be up to five times the bank’s Net Overnight Open Position Limit or the higher of that and the already approved intra‑day limit, whichever is higher. (Net Overnight Open Position Limit = the amount the bank can hold in foreign currency overnight.)
This change only applies to positions where the rupee is one of the currencies involved. (Rupee‑involved positions = trades that include the Indian rupee.)
Banks must update their internal risk policies to reflect this new limit and monitor daily exposures closely so they don’t exceed it. (Risk management = keeping track of how much risk the bank is taking on.)
The new limit gives banks more flexibility to trade during the day without needing a fresh RBI approval, but they still need to keep enough capital buffers and follow FEDAI circular SPL‑58/Risk Mgmt./2011. (Capital buffers = extra money set aside to cover potential losses.)
How it plays out — a real example
Arjun, a forex dealer in Mumbai’s treasury desk, checks his day‑to‑day rupee exposure. After the RBI change, he can now hold up to five times the overnight limit, so he increases his rupee‑pair trades to meet client demand while keeping an eye on the new cap and updating the risk policy in the bank’s system.
What changed
Previously, intra-day open position limits for AD banks were not to exceed the Net Overnight Open Position Limit for rupee positions. Now, RBI has revised this to allow intra-day limits up to five times the Net Overnight Open Position Limit or the existing approved intra-day open position limit, whichever is higher.
What it means for you
Banks get more headroom to manage intra-day forex risk, especially in rupee pairs, without needing fresh approvals. This can improve liquidity and trading flexibility, but banks must still ensure robust risk management to avoid excessive exposure.
What you must do
Update internal risk policies to reflect the new intra-day limit of five times the Net Overnight Open Position Limit or existing approved intra-day open position limit, whichever is higher.
Ensure compliance with FEDAI circular SPL-58/Risk Mgmt./2011, which restricts these limits to positions involving the rupee.
Monitor intra-day exposures closely to prevent breaching the revised limits and maintain adequate capital buffers.
Who it affects
Authorised Dealer Category - I banks, Forex dealers and treasury teams, Risk management departments
❓ Common questions
Does this circular apply to all currency pairs?
No, as per FEDAI circular SPL-58/Risk Mgmt./2011, the revised intra-day limit applies only to positions where the rupee is one of the currencies.
What is the effective date of this change?
The circular was issued on May 10, 2012, and is effective from that date.
Do we need RBI approval for the higher limit?
No, the circular sets the limit at five times the Net Overnight Open Position Limit or the existing approved limit, whichever is higher, so no fresh approval is needed if within these parameters.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/546
A.P. (DIR Series) Circular No.123
May 10, 2012
To,
All Authorised Dealer Category - I Banks
Madam / Sir,
Risk Management and Inter Bank Dealings
Attention of Authorized Dealers Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.58 dated December 15, 2011 on the captioned subject.
2. In terms of the above circular, Intra-day open position / daylight limit of Authorised Dealers should not exceed the erstwhile Net Overnight Open Position Limit available to them. It was further clarified through FEDAI Circular SPL-58/Risk Mgmt./2011 dated 21st December 2011 that restrictions placed on Intraday positions limits is only applicable for positions involving Rupee as one of the currencies.
3. On a review it has been decided to fix the intra-day open position / daylight limit of the Authorised Dealers at five times the Net Overnight Open Position Limit available to them or the existing Intra-day open position limit as approved by the Reserve Bank, whichever is higher, for positions involving Rupee as one of the currencies.
4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/546 · issued 10 May 2012. The plain-English explanation above is BankPulse’s own independent summary.
Monitor intra-day exposures closely to prevent breaching the revised limits and maintain adequate capital buffers.
📜 Compliance
Update internal risk policies to reflect the new intra-day limit of five times the Net Overnight Open Position Limit or existing approved intra-day open position limit, whichever is higher.
Ensure compliance with FEDAI circular SPL-58/Risk Mgmt./2011, which restricts these limits to positions involving the rupee.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Authorised Dealer Category - I banks, Forex dealers and treasury teams, Risk management departments), your first concrete step on “RBI Eases Intra-Day Forex Position Limits for AD Banks” is: “Update internal risk policies to reflect the new intra-day limit of five times the Net Overnight Open Position Limit or existing approved intra-day open position limit, whichever is higher.” (RBI issued this 10 May 2012).
Circular: RBI/2011-12/546 -- RBI Eases Intra-Day Forex Position Limits for AD Banks
Issued: 10 May 2012
Action required: Update internal risk policies to reflect the new intra-day limit of five times the Net Overnight Open Position Limit or existing approved intra-day open position limit, whichever is higher.
Action required: Ensure compliance with FEDAI circular SPL-58/Risk Mgmt./2011, which restricts these limits to positions involving the rupee.
Action required: Monitor intra-day exposures closely to prevent breaching the revised limits and maintain adequate capital buffers.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7195&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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