RBI Issues Final Amendment Directions on Counterparty Credit Risk Framework

The Reserve Bank of India has released the final set of amendments to the Counterparty Credit Risk (CCR) framework following the draft circular issued on August 20, 2025. The draft had invited stakeholder comments until September 10, 2025, and proposed key changes related to capital charge requirements and the calculation methodology for Potential Future Exposure (PFE).

After examining the feedback, the RBI has incorporated suitable revisions before issuing the formal Amendment Directions. These measures are aimed at enhancing clarity and improving alignment with international supervisory standards.

Background To the Draft CCR Instructions

The draft circular sought to update CCR norms across banks and financial institutions regulated by the RBI. It proposed that banks acting as clearing members on SEBI‑recognised exchanges in equity and commodity derivatives segments must maintain a capital charge for CCR.

This clarification aimed to remove scope for interpretation in the existing rules. The draft also recommended realigning add‑on factors for PFE calculations under the Current Exposure Method in line with Basel Committee on Banking Supervision (BCBS) standards.

Stakeholder Feedback and RBI’s Incorporation

Stakeholders, including banks and industry bodies, submitted responses up to September 10, 2025. The RBI reviewed this feedback and made adjustments where necessary, ensuring the final guidelines reflected operational realities.

The central bank prepared a consolidated statement summarising the feedback and its treatment of each item. This statement has been included in the Annex accompanying the final notification.

Overview Of the Amendment Directions Issued

The RBI has issued four separate Amendment Directions covering different categories of regulated entities. These include commercial banks, small finance banks, payments banks, and All India Financial Institutions.

Alignment With International Standards and Clarifications

The primary objective of these amendments is to bring the Indian CCR framework closer to global supervisory benchmarks. By aligning the add‑on factors with BCBS guidelines, the RBI expects more consistent risk measurement across institutions.

The circular also provides clarity on the treatment of clearing member exposures, reducing ambiguity for banks operating in exchange‑traded derivatives. These measures enhance transparency and standardisation in how PFE is computed across regulated entities.

Read More: Deposit Growth Lags at 10.9% as Banking Sector Credit-Deposit Ratio Stays Elevated.

Conclusion

The RBI’s final Amendment Directions mark a significant update to the CCR framework for banks and financial institutions. The changes formally incorporate feedback from multiple stakeholders and refine the draft proposals issued in August 2025.

By clarifying capital charge requirements and aligning PFE computation with international norms, the amendments strengthen consistency and regulatory clarity. The revised framework ensures that regulated entities follow a uniform, transparent approach to managing counterparty exposures.

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