The Reserve Bank of India amended its capital adequacy directions for payments banks to apply a 2% risk weight to specified trade exposures where a bank acts as a clearing member of a QCCP. The change, which took effect on issuance, follows a review of the legal opinion requirement and aligns the directions with international standards. The 2% risk weight covers a clearing member bank’s own trade exposures arising from over-the-counter derivatives, exchange-traded derivatives and securities financing transactions. It also covers exposures from client clearing services where the bank must reimburse a client for losses if the QCCP defaults.
Reserve Bank of India applies 2% risk weight to specified payments bank exposures to QCCPs
The Reserve Bank of India applied a 2% risk weight to specified payments bank trade exposures to QCCPs, aligning its capital rules with international standards. The treatment covers a clearing member bank’s own transactions and certain client clearing exposures where it must reimburse client losses following a QCCP default.