The Reserve Bank of India issued a second amendment to its capital adequacy directions for commercial banks, revising the risk-weighted asset treatment for irrevocable payment commitments that banks issue to clearing corporations of stock exchanges on behalf of clients. Such commitments are classified as financial guarantees with a credit conversion factor of 100 per cent, but capital is to be maintained only on the portion treated as capital market exposure (CME) under the Reserve Bank of India (Commercial Banks - Concentration Risk Management) Directions, 2025. The CME amount attracts a risk weight of 125 per cent. The change takes effect from the earlier of the date a bank decides to implement the Reserve Bank of India (Commercial Banks – Credit Facilities) Amendment Directions, 2026 and April 1, 2026.
Reserve Bank of India 2026-02-13
Reserve Bank of India updates capital adequacy treatment of banks’ irrevocable payment commitments to clearing corporations
The Reserve Bank of India amended capital adequacy directions for commercial banks, revising risk-weighted asset treatment for irrevocable payment commitments to clearing corporations, classifying them as financial guarantees with a 100% credit conversion factor. Capital is required only on the portion treated as capital market exposure, attracting a 125% risk weight, effective from the earlier of a bank's implementation decision or April 1, 2026.