Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Directions, 2025 · RBI/DoR/2025-26/173
RBI master-direction RBI/DoR/2025-26/173 · 28 Nov 2025
RBI master-direction RBI/DoR/2025-26/173 · 28 Nov 2025
Summary
Check the official recordThe Reserve Bank of India consolidates guidelines on Basel III prudential norms for Commercial Banks. These Directions cover the Standardised Approach for Counterparty Credit Risk, capital requirements for exposures to Central Counterparties, operational risk capital, and Interest Rate Risk in the Banking Book. The rules apply to all Commercial Banks, excluding Small Finance Banks, Local Area Banks, Payments Banks, and Regional Rural Banks. Banks must prepare for IRRBB measurement and submit quarterly disclosures until the implementation date. The Reserve Bank of India will communicate the effective date separately. Previous actions and obligations remain valid. The Reserve Bank of India retains authority to enforce penalties for past contraventions and provides final, binding interpretations of these provisions.
What you must do
Key dates
Who is affected
Thresholds
If you do not comply
RBI/DoR/2025-26/173 DoR.MRG.REC.92/00-00-003/2025-26 November 28, 2025
Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Directions, 2025
Table of Contents
Chapter I - Preliminary A. Short title and commencement B. Applicability C. Definitions D. Scope
Chapter II - Computing Exposure for Counterparty Credit Risk arising from Derivative Transactions A. Standardised Approach for Counterparty Credit Risk (SA-CCR) for computing default risk capital charge
Chapter III – Capital Requirement for Exposures to Central Counterparties (CCPs) A. Scope of Application B. Exposures to QCCPs C. Exposures to non-qualifying CCPs D. Requirements for Recognition of Net Replacement Cost in Close-out Netting Sets
Chapter IV – Minimum Capital Requirements for Operational Risk A. Interim arrangement B. Scope C. Definitions D. Components of Basel III Standardised Approach (Basel III SA) D.1 Business Indicator (BI) D.2 Business Indicator Component (BIC) D.3 Internal Loss Multiplier (ILM) D.4 Operational Risk Capital D.5 Risk-Weighted Assets E. Calculation of ORC within a banking group F. Inclusion of BI items related to acquisitions and mergers G. Exclusion of divested activities from the BI H. High-quality loss data identification, collection, and treatment for a bank in buckets 2 or 3 I. Disclosure
Chapter V - Governance, Measurement and Management of Interest Rate Risk in Banking Book A. Introduction B. Interim Arrangements C. Definitions D. Governance and Control E. IRRBB Measurement F. Stress testing framework G. Data integrity and model validation H. Capital assessment for IRRBB under Pillar 2 I. Outlier Test J. Reporting and Disclosures K. Interest Rate Shock Scenarios L. Indicative methodology for computing ΔEVE M. Formats for disclosure of IRRBB
Chapter VI – Repeal and Other provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations
Annex
In exercise of the powers conferred by Section 35A the Banking Regulation Act, 1949 (‘BR Act’), and all other provisions / laws enabling Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.
Chapter I - Preliminary
A. Short title and commencement
B. Applicability 3. These Directions shall be applicable to Commercial Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank') excluding Small Finance Banks (SFBs), Local Area Banks (LABs), Payments Banks (PBs), and Regional Rural Banks (RRBs).
For the purpose of these Directions, ‘Commercial Banks’ means banking companies (other than Small Finance Banks, Payments Banks, and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949.
C. Definitions 4. Some definitions have been provided in the respective chapters as per the applicability. 5. All other expressions, unless defined in the corresponding chapter, shall have the same meaning as have been assigned to them under the Reserve Bank of India Act, 1934, or the Banking Regulation Act, 1949, or any statutory modification or re-enactment thereto, or Glossary of Terms published by the RBI, or as used in commercial parlance, as the case may be.
D. Scope 6. To align Basel III prudential norms applicable to Scheduled Commercial Banks with the latest standards issued by Basel Committee on Banking Supervision (BCBS), RBI from time to time has issued guidelines / instructions / directives on different aspects of the Basel III standards such as the standardised approach for measuring counterparty credit risk exposures, exposures to Central Counterparties, minimum capital requirements for operational risk, and Interest Rate Risk in Banking Book. The implementation dates for these guidelines, however, have not yet been notified by RBI. Accordingly, these Directions consolidate the guidelines / instructions / directives issued earlier on the aforementioned subjects.
Chapter II - Computing Exposure for Counterparty Credit Risk arising from Derivative Transactions
A. Standardised Approach for Counterparty Credit Risk (SA-CCR) for computing default risk capital charge 7. The SA-CCR shall be used for computing exposure for default risk capital charge for Over-the-Counter (OTC) derivatives (whether centrally cleared or not), exchange-traded derivatives and long settlement transactions. SA-CCR shall not be used for Securities Financing Transactions (SFTs) which are covered under Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 .
Explanation: Long settlement transactions are transactions where a counterparty undertakes to deliver a security, or a foreign exchange amount against cash, other financial instruments, or vice versa, at a settlement or delivery date that is contractually specified as more than the lower of the market standard for this particular instrument and five business days after the date on which the bank enters into the transaction.
When a bank purchases credit derivative protection against a banking book exposure, or against a counterparty credit risk exposure, it shall determine its capital requirement for the hedged exposure subject to the criteria and general rules for the recognition of credit derivatives, i.e., substitution or double default rules as appropriate. Where these rules apply, the exposure amount for counterparty credit risk from such instruments is zero. The exposure amount for counterparty credit risk is zero for sold credit default swaps in the banking book where they are treated as a guarantee provided by the bank in the framework and subject to a credit risk charge for the full notional amount.
Computation of exposure The SA-CCR shall be used for computing Exposure at Default (EAD) for OTC derivatives, exchange-traded derivatives, and long settlement transactions. Exposure shall be calculated separately for each netting set. However, in cases where bilateral netting is not permitted, each and every trade shall be its own netting set. The exposure shall be determined as follows:
EAD = 1.4 * (RC + PFE)
where: RC = the replacement cost calculated according to methodology given in paragraph 11, and PFE = the amount for potential future exposure calculated according to the methodology given in paragraph 12.
Explanations:
(i) A netting set is a group of transactions with a single counterparty that are subject to a legally enforceable bilateral netting arrangement and for which netting is recognised for regulatory capital purposes under the provisions of the requirements under paragraph 21(2). These requirements have to be satisfied on an on-going basis.
(ii) A hedging set is a set of transactions within a single netting set within which partial or full offsetting is recognised for the purpose of computing PFE add-on under these guidelines.
(2) A bank may net transactions for the purpose of these Directions (e.g., when determining the RC component of a netting set) subject to novation under which any obligation between a bank and its counterparty to deliver a given currency on a given value date is automatically amalgamated with all other obligations for the same currency and value date, legally substituting one single amount for the previous gross obligations. A bank may also net transactions subject to any legally valid form of bilateral netting not covered in the preceding sentence, including other forms of novation. Wherever netting is applied, a bank shall satisfy that the requirements laid down under paragraph 21(2) are met.
(3) Different set of computations for margined and unmargined netting sets: The computation of RC is dependent on whether the trades with a counterparty are subject to a margin agreement or not, i.e., whether the netting set is margined or unmargined. Where a margin agreement exists, the formulation could apply both to bilateral transactions and central clearing relationships. Where collateral other than variation margin (e.g., initial margin) is taken, it is treated as unmargined netting set. Bilateral transactions with a one-way margining agreement in favour of the bank’s counterparty (i.e., where a bank posts, but does not collect collateral) shall be treated as unmargined transactions. The RC and PFE components shall be calculated differently for margined and unmargined netting sets. The EAD for a margined netting set is capped at the EAD of the same netting set calculated on an unmargined basis.