RBI issues final Basel III market risk capital rules
The Reserve Bank of India has issued final directions on minimum capital requirements for market risk, to take effect on April 1, 2027, aligning Indian rules with the revised Basel III framework while preserving simplicity and implementation flexibility. The directions follow a February 2023 draft and intermediate transition scalars in effect since April 1, 2024. Key changes include removing a separate trading book definition in favor of referencing Investment Directions, revised net open position and forex risk charges, updated interest rate specific risk tables aligned with BCBS, revised capital computation for debt mutual funds and ETFs, and expanded hedging rules to include permitted total return swaps.
Banks must implement new market risk rules by 1 April 2027.
Context
The RBI issued draft guidelines in February 2023. Intermediate transition scalars have been in effect since April 1, 2024. Banks must prepare to implement the final directions by April 1, 2027.
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