Reserve Bank of India Issues Twelfth Amendment Directions, 2026 on Prudential Norms for Commercial Banks' Capital Adequacy

Key facts

• Reserve Bank of India (RBI) issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Twelfth Amendment Directions, 2026 on October 07, 2026, under Section 35A of the Banking Regulation Act, 1949.
• The Amendment Directions amend the Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Directions, 2025 to align them with international standards and come into effect from the date of issue.
• A 2 per cent risk weight applies to a bank's trade exposure to a Qualified Central Counterparty (QCCP) when acting as a clearing member for its own purposes, covering OTC derivatives, exchange traded derivatives, and SFTs; the same 2 per cent risk weight also applies where the clearing member bank offers clearing services to clients and is obligated to reimburse them if the QCCP defaults.
• For incurred CVA losses, the exposure at default (EAD) must use the CVA recognised by the bank as an incurred write-down, based on amounts in its financial statements per applicable accounting and valuation policies, with the EAD reduction calculated without offsetting debit valuation adjustments deducted from capital and not applied for determining the CVA risk capital requirement.
• Paragraph 213 (2) (iv) (c), (d), and (e) of the 2025 Directions have been deleted.