RBI issues rules requiring banks hold capital for market risks
The Reserve Bank of India (RBI) just rolled out fresh rules for commercial banks, making sure they keep enough capital aside to cover market risks: think interest rates, stocks, and foreign currency.
Announced on September 21, these guidelines use a simpler calculation method and make it clear what counts as a "banking" versus "trading" asset.
RBI also warned banks not to shuffle assets between books just to dodge stricter requirements.
Daily risk checks start April 2027
Starting April 1, 2027, banks will need to check their risk levels daily and can hedge their risks using an external hedge or an internal risk transfer.
If a bank wants to reclassify instruments between the trading book and the banking book, they'll have to show the impact before and after the move.
There's also some flexibility around foreign currency positions, but those will get reviewed every quarter.
All in all, these changes are meant to keep India's banking system safer and more stable for everyone.