RBI Refines Global Credit Risk Standards: Banks Invited to Review Draft Amendments on SA-CCR

RBI Refines Global Credit Risk Standards: Banks Invited to Review Draft Amendments on SA-CCR​

Reserve Bank of India Rolls Out Amended Directions for Counterparty Credit Risk Management​

The Reserve Bank of India (RBI) has formally invited public comments on the draft Amendment Directions concerning the Standardised Approach for Counterparty Credit Risk (SA-CCR). These proposed amendments reflect a comprehensive review of existing guidelines, responding to significant legal and regulatory developments within the financial markets. The updated directions are intended to clarify exposures across both banking and trading book segments for regulated entities.

The RBI released the draft Amendment Directions under the Reserve Bank of India (Commercial Banks - Forthcoming Instructions) Amendment Directions, 2026. Regulated Entities, market participants, and all interested parties have been granted until July 1, 2026, to submit their feedback on this critical update.

Evolving Landscape of Credit Risk Management​

The existing regulatory framework requires the use of the Current Exposure Method (CEM) for calculating Counterparty Credit Risk (CCR) exposure. Original guidelines were issued by RBI in 2016 and intended an implementation date of April 1, 2018. However, the implementation of those initial directives was subsequently deferred.

The market has continued to evolve significantly since then. Key developments include the enactment of the Bilateral Netting of Qualified Financial Contracts Act, 2020. Furthermore, margining frameworks were implemented via the RBI’s Margining for Non-Centrally Cleared OTC Derivatives Directions, 2024.

Addressing Complexity and Market Evolution through SA-CCR Amendments​

Considering both the elapsed time since the original guidelines and recent legal mandates, the RBI has undertaken a comprehensive review of the existing standards. The proposed amendments seek to bridge gaps identified in previous rules while incorporating global best practices.

The draft directions introduce several key clarifications for banks. These include precise guidance on how multiple margin agreements and complex netting sets should be treated in compliance with current legal and regulatory developments. This move enhances the robustness of the credit risk calculation process across financial institutions.

Guidance on Derivatives and Clearing Operations​

A major focus of the proposed amendments is providing granular guidance on derivative transactions. The draft specifically addresses the treatment for deferment of option premium. It also provides detailed instruction on the computation of effective notional amounts when dealing with options.

Furthermore, the RBI has incorporated guidance for scenarios where a bank acts as a clearing member for SEBI recognized stock exchanges. This coverage extends to both equity derivatives and commodity derivatives segments, ensuring operational clarity across all market participants.

Compliance Deadlines and Stakeholder Engagement​

The issuance of these Draft Amendment Directions underscores the RBI’s commitment to refining regulatory standards in line with global norms. The comprehensive nature of the proposed changes—including clarification on CCR scope and the inclusion of specific disclosure templates for SA-CCR—mandates thorough industry review.

Feedback can be submitted via a dedicated link under the 'Connect 2 Regulate' Section on the Reserve Bank’s website. Alternatively, comments can be forwarded to the Chief General Manager Market Risk Group Department of Regulation at the RBI Central Office in Mumbai.