New Delhi, June 23 -- The Reserve Bank of India (RBI) has relaxed foreign exchange exposure norms for banks raising funds under its recently announced concessional swap facility, a move that is expected to encourage lenders and state-run entities to tap overseas markets without breaching regulatory limits.

In a circular issued on Tuesday, the central bank said authorised dealer category-I (AD Cat-I) banks will be allowed to exclude certain hedged foreign currency positions from the calculation of their net overnight open positions (NOP) limits.

The exemption will apply to positions arising from hedged transactions linked to foreign currency non-resident bank or FCNR(B) deposits, external commercial borrowings (ECBs), and overseas foreig...