RBI finalizes Basel III market risk capital requirements for banks
Published 26 Sep 2026 · source date 21 Sep 2026
The Reserve Bank of India has issued final Directions on minimum capital requirements for market risk under the revised Basel III framework, effective April 1, 2027. The framework adopts the Simplified Standardised Approach for computing market risk capital. Key revisions include alignment of interest rate risk tables with Basel Committee guidelines, clarified treatment of debt mutual funds and exchange-traded funds in trading books, and updated provisions for positions hedged by credit derivatives and total return swaps. Transition scalars have been in effect since April 2024 to facilitate smooth implementation.
Why it matters
These Directions establish mandatory prudential standards for how commercial banks must calculate and hold capital against market risk exposure. Compliance officers must ensure their institutions' trading book valuations, hedging strategies, and capital adequacy calculations align with the new requirements by the April 2027 deadline. The extended lead time and transition arrangements provide planning flexibility but require immediate operational readiness.