RBI amends deferment of option premium provisions under Commercial Banks (Miscellaneous) Directions, 2025. Changes follow issuance of forthcoming instructions on capital requirements.
Updated Rules on Deferment of Option Premium for Commercial Banks
The Reserve Bank of India, through the Commercial Banks (Miscellaneous) Amendment Directions, 2026 issued on October 7, 2026, has revised Sub-section D of Chapter IV concerning the deferment of option premium. This follows the issuance of the Commercial Banks (Forthcoming Instructions) Amendment Directions, 2026 and aims to harmonize existing provisions with updated capital adequacy frameworks.
The amendment addresses inconsistencies arising from earlier regulatory layers and ensures coherence in treatment of contingent liabilities linked to derivatives. By aligning deferment norms with new valuation and capital measurement methodologies, the RBI strengthens the integrity of risk-based supervision.
While specific operative text remains partially redacted in the public circular, the intent is clear: eliminate regulatory arbitrage and ensure accurate reflection of banks’ exposure in financial statements. Legal and compliance teams should audit existing derivative contracts involving deferred premiums and reassess recognition timing under IND AS 109.
This update reinforces the need for continuous monitoring of interconnected regulatory layers. Practitioners must integrate these changes into stress-testing models and Pillar 3 disclosure templates. Early engagement with auditors and risk officers is advised.
Citations
- Reserve Bank of India (Commercial Banks – Miscellaneous) Amendment Directions, 2026
