The RBI amended the methodology for minimum capital requirements for counterparty credit risk in commercial banks to align with evolving international standards, effective October 7, 2026.
RBI Updates Counterparty Credit Risk Norms
Through the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Amendment Directions, 2026, issued on October 7, 2026, the regulator updated Chapter II and III of the 2025 Directions concerning minimum capital requirements for counterparty credit risk (CCR).
The revision refines the calculation of exposure at default (EAD) and potential future exposure (PFE), incorporating advanced measurement techniques and haircuts for collateral. The updated framework integrates recommendations from the Basel Committee on Banking Supervision, particularly in stress-scenario calibration and maturity adjustments.
"To ensure greater alignment with international best practices,"the RBI noted, indicating a commitment to global comparability in risk assessment. The changes affect internal model approvals, capital adequacy reporting, and large exposure frameworks for Indian commercial banks.
Legal practitioners must assist banks in revising internal policies, especially those related to derivatives trading, collateral management, and interbank exposures. The update may also trigger revisions in ISDA master agreements and netting arrangements governed by Indian law. As the regime becomes more sophisticated, legal advice must be closely integrated with risk and treasury functions.
Citations
- Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Amendment Directions, 2026, dated October 7, 2026
