RBI Mandates New Basel III Market Risk Norms for Banks by 2027
· Business · Economic Times, LiveMint
The Reserve Bank of India has issued updated guidelines for market risk capital requirements, aligning domestic banking standards with the revised Basel III framework. Starting April 1, 2027, banks are strictly prohibited from reclassifying instruments between trading and banking books to artificially lower capital requirements. Commercial banks, excluding small finance, payments, and local area banks, must adopt a simplified standardised approach to calculate risk-weighted assets. The central bank also revised interest rate risk tables and updated the regulatory treatment for debt mutual funds and exchange-traded funds. These measures aim to enhance regulatory clarity and provide banks with sufficient lead time for implementation.
Why it matters
The new norms prevent banks from using regulatory arbitrage to bypass capital requirements, ensuring greater financial stability across the Indian banking sector. By mandating a standardized approach, the RBI increases transparency in how banks assess and report their market-related risks.
Read the original report — Economic Times
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