RBI mandates 3 bucket classification for banks starting April 2027
The Reserve Bank of India (RBI) is bringing in fresh rules for banks starting April 2027, aiming to make risk management more solid.
Banks will now have to sort their financial activities into three clear buckets: Interest/Lease/Dividend, Services, and Financial components.
RBI specifies income categories, loss data
Interest income (from loans and advances, securities, financial and operating leases, hedge accounting derivatives and other interest income) will need to include interest rate derivative assets at fair value, while service fees get their own category, excluding non-financial outsourcing costs.
The financial component splits trading from regular banking results.
Plus, banks must generally use 10 years of past loss data (at least five if they are calculating the ILM for the first time) when calculating risk, all to keep things more transparent and standardized.