The Reserve Bank of India has issued the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026, effective immediately, amending the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Directions, 2025 to provide greater clarity on the treatment of Counterparty Credit Risk (CCR) and to align the framework with international standards.
The amendment clarifies that CCR exposures of all entities required to be consolidated must be included while computing capital requirements on a consolidated basis. It also revises the add-on factors for market-related off-balance sheet items, covering interest rate contracts, exchange rate contracts, equities, precious metals (except gold), and other commodities. Further, the Directions clarify the treatment of contracts with periodic reset features, require add-on factors to be applied to all outstanding CCR exposures, and mandate that AIFIs acting as clearing members of SEBI-recognised stock exchanges in derivatives segments must compute and maintain capital charge for CCR.
Additionally, the amendment revises the risk-weight treatment for exposures to Qualified Central Counterparties (QCCPs) by prescribing a 2% risk weight for trade exposures, while permitting exemption from capital maintenance where the clearing member is not obligated to reimburse clients for losses in case of QCCP default and holds an independent legal opinion confirming such protection.
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13331&Mode=0
