The Reserve Bank of India amended its capital adequacy rules for small finance banks to apply a 2% risk weight to specified trade exposures to qualifying central counterparties, or QCCPs. The change aligns the prudential treatment with international standards and took effect upon issuance. The risk weight applies when a small finance bank acts as a clearing member of a QCCP for its own over-the-counter derivatives, exchange-traded derivatives and SFT transactions. It also covers trade exposures arising from client clearing where the bank must reimburse a client for losses if the QCCP defaults.
Reserve Bank of India applies 2% risk weight to specified small finance bank exposures to QCCPs
The Reserve Bank of India applied a 2% risk weight to specified small finance bank trade exposures to QCCPs, aligning its capital rules with international standards. The treatment covers proprietary clearing and client clearing exposures where the bank must reimburse client losses following a QCCP default.