meta_id 2955184

On March 10, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, amending the capital adequacy framework for commercial banks operating in India. The amendments provide greater clarity on the treatment of counterparty credit risk (CCR) exposures and largely align the framework with international standards. Key changes include revised add-on factors for market-related off-balance sheet items across interest rate contracts, exchange rate contracts, gold, equities, precious metals, and other commodities. The add-on factors are tiered by residual maturity, ranging from one year or less to over five years. For example, interest rate contracts of one year or less attract a 0.25 percent add-on factor, while those over five years attract 1.50 percent. The amendments clarify that add-on factors apply to all outstanding CCR exposures and specify treatment for banks acting as clearing members of Securities and Exchange Board of India (SEBI)-recognised stock exchanges in equity derivatives and commodity derivatives segments. The definition of "precious metals" is clarified to include silver, platinum, and palladium, while "other commodities" encompasses energy contracts, agricultural contracts, base metals, and non-precious metal commodity contracts. Additionally, the amendments modify risk weight treatment for clearing members of qualified central counterparties (QCCPs). A two percent risk weight applies to trade exposures to QCCPs for over-the-counter derivatives, exchange-traded derivatives, and securities financing transactions. Clearing members offering client clearing services are exempt from maintaining capital for certain transactions if they obtain independent legal opinion confirming they are protected from liability in case of QCCP default. The amendment directions came into effect from the date of issue. **Reference:** Reserve Bank of India notification RBI/2025-26/238, March 10, 2026