Guidance on Regulatory Principles for Model Risk Management
RBI press-release 2026-2027/528 · 24 Jun 2026
Official title
RBI issues draft ‘Guidance on Regulatory Principles for Model Risk Management’
RBI press-release 2026-2027/528 · 24 Jun 2026
Official title
RBI issues draft ‘Guidance on Regulatory Principles for Model Risk Management’
Summary
Check the official recordThe Reserve Bank of India releases draft guidance on model risk management for public comment. The guidance applies to commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban co-operative banks, rural co-operative banks, all India financial institutions, non-banking financial companies, asset reconstruction companies, and credit information companies. It covers all models used by these entities, including third-party models and those using artificial intelligence or machine learning. The guidance aims to strengthen governance, oversight, and risk management across the model lifecycle. Stakeholders must submit feedback by July 24, 2026, through the RBI website or by mail.
What you must do
Key dates
Who is affected
June 24, 2026
RBI issues draft ‘Guidance on Regulatory Principles for Model Risk Management’
Reserve Bank of India has today released the draft ‘Guidance on Regulatory principles for Model Risk Management’ for public comments.
The draft Guidance is applicable to following regulated entities:
(i) Commercial Banks
(ii) Small Finance Banks
(iii) Payments Banks
(iv) Local Area Banks
(v) Regional Rural Banks
(vi) Urban Co-operative Banks
(vii) Rural Co-operative Banks
(viii) All India Financial Institutions
(ix) Non-Banking Financial Companies
(x) Asset Reconstruction Companies
(xi) Credit Information Companies
The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on RBI’s website or alternatively be forwarded to:
The Chief General Manager, Operational Risk Group
Department of Regulation, Central Office
Reserve Bank of India
Shahid Bhagat Singh Marg, Fort
Mumbai – 400 001
Or
By e-mail with the subject line ‘Feedback on Guidance on Regulatory Principles for Model Risk Management’
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ǐरज़वर् बैंक
RESERVE BANK OF INDIA
वेबसाइट : www.rbi.org.in/hindi
संचार ͪ वभाग, केंद्रȣय कायार्लय, शहȣद भगत ͧ संह मागर्, फोटर्, मुंबई - 400 001
Website : www.rbi.org.in
Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in
Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
Background and Objective
The Reserve Bank had issued the draft “Regulatory Principles for Management of Model Risks in Credit” on August 05, 2024, with a view to strengthen governance and risk management practices relating to use of models in credit, followed by report of the Committee on Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) on August 13, 2025. Considering model usage has expanded significantly and regulated entities are increasingly using models, including those employing Artificial Intelligence / Machine Learning (AI / ML), across various business and decision-making processes; weaknesses in their governance, oversight, risk management and controls may expose the regulated entities to financial, operational, compliance, and reputational risks. Recognising this, the Reserve Bank has today released draft ‘Guidance on Regulatory Principles for Model Risk Management’ which provides holistic and broad regulatory expectations for model risk management across the model lifecycle. The Guidance is applicable to all models used by regulated entities, including third party models and models employing AI / ML.
(Brij Raj)
Press Release: 2026-2027/528 Chief General Manager