RBI issues norms on capital requirements for market risk under Basel III for banks

retained text

The directions, issued on Monday, aim to align the market risk guidelines with the revised Basel III framework, while ensuring simplicity of regulations, and providing flexibility, and ease of adoption.
The directions are applicable to all commercial banks, except small finance banks, payments banks and local area banks.
RBI said the directions will take effect from April 1, 2027, ensuring sufficient lead time for banks.
"A bank shall not reclassify instruments between the trading book and the banking book for regulatory arbitrage, i.e., with the intention of achieving lower capital requirements," the central bank said.
It further said that banks will have to use the simplified standardised approach (SSA) for computing risk-weighted assets for market risk.
The risk-weighted assets will be determined by multiplying the capital requirements calculated under the framework by a factor of 12.5.
RBI also said the specific risk tables for interest rate risk have been revised to align with the Basel Committee on Banking Supervision (BCBS) guidelines, which also provide a more concise and clean treatment.
On debt mutual funds/exchange traded funds (ETF) held in the trading book, it said the capital treatment has been revised to ensure capital computation is based on the underlying risk drivers while ensuring sufficient guardrails.
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

document fetched 2026-09-22 02:54