Bank Nifty Falls Over 2.5% After RBI Caps Forex Positions At $100 Million

Bank Nifty lost over 2.5% in trade on March 30, 2026, as the Reserve Bank of India (RBI) asked banks to restrict their net open rupee position in the foreign exchange market to $100 million by the end of each business day, as reported by Reuters.

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The RBI directive, which was given on March 28, has to be adhered to by banks by April 10, 2026.

Broad-Based Selling Across Banking Stocks

All 14 constituents of the Bank Nifty index traded in the red during the session. The index reversed gains after rising over 4% in the previous two sessions.

AU Small Finance Bank led the losses, declining around 2.5% to ₹860.2 per share on the National Stock Exchange, according to exchange data. Federal Bank and Punjab National Bank fell 1.91% and 1.96%, respectively.

Private banks, PSU lenders, and financial stocks declined in the range of 2%–2.5%, reflecting broad-based weakness across the sector.

RBI Directive On Forex Positions

The RBI directive caps banks’ net open positions in the rupee at $100 million, aimed at reducing speculative activity in the foreign exchange market, according to Reuters.

Banks typically maintain such positions to benefit from price differences between offshore non-deliverable forwards and onshore forward markets. The lender is forced to reduce the positions because of the new limit set by the RBI.

Impact On Currency Markets

Following this directive, banks have now started unwinding these arbitrage trades, which has led to an increase in the selling of dollars in the domestic market. This has further led to an appreciation of the rupee in both spot and forward markets, as per reports from Reuters.

The one-month USD/INR forward rate is quoted at 94.13, which is down from 95.15 on March 28.

Rupee Movement And Market Conditions

It is pertinent to mention that the RBI’s decision comes at a time when the currency market is highly volatile. It is stated that the Indian Rupee lost over 4% in March 2026 compared to the U.S. Dollar due to various factors, including geopolitical tensions in West Asia, as stated by Reuters. The RBI is intervening in the market to control the volatility in the market.

The banks have sought more time to comply with the RBI directive and have asked for a three-month window for the purpose. The banks have expressed concerns that they might incur losses if they are forced to unwind the positions quickly.

The RBI’s directive has led to immediate adjustments in forex positions and triggered selling pressure in banking stocks, with the Bank Nifty reflecting the impact across the sector.