From The Economic Times · ET Online · · 1m 20s
RBI sets new capital rules for banks by 2027
India's central bank finalizes Basel III market risk standards with a three-year transition period for commercial banks.
In brief
India's central bank finalizes Basel III market risk standards with a three-year transition period for commercial banks. Banks have until April 2027 to comply with revised capital requirements for market risk, with intermediate steps already underway since 2024. Originally reported by The Economic Times.
RBI finalizes new capital rules
The Reserve Bank of India issued final directions on market risk capital requirements for commercial banks, aligning with revised Basel III standards.
April 2027 deadline for compliance
Commercial banks must adopt the revised framework by April 1, 2027, with intermediate transition steps already in place since April 2024.
Simplified approach to market risk
The framework adopts the Simplified Standardised Approach for calculating market risk capital, making requirements more concise and flexible.
Trading book and forex rules updated
The RBI removed separate trading book definitions and revised foreign exchange risk capital charges to align with Basel Committee guidelines.
Interest rate and derivatives treatment
The RBI revised specific risk tables for interest rate risk and expanded hedging rules to include total return swaps for credit derivatives.
Mutual funds and ETFs in trading book
Capital treatment for debt mutual funds and exchange-traded funds held for trading has been revised based on underlying risk drivers.
The essence
Banks have until April 2027 to comply with revised capital requirements for market risk, with intermediate steps already underway since 2024.
