The Reserve Bank of India has issued the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, effective immediately, amending the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 to provide greater clarity on the treatment of Counterparty Credit Risk (CCR) exposures and align the framework with international standards. The amendment revises the add-on factors for market-related off-balance sheet exposures (such as interest rate, exchange rate, equity, precious metal, and commodity contracts) under Table 14. It also clarifies the treatment of contracts with periodic reset features, requires add-on factors to be applied to all outstanding CCR exposures, and specifies that banks 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), prescribing a 2% risk weight for trade exposures, with an exemption from capital maintenance where the bank has a valid legal opinion confirming absence of reimbursement liability to clients in case of QCCP default.
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13329&Mode=0
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