The RBI issued the second amendment to its 2025 Directions on Minimum Capital Requirements for Operational Risk, clarifying implementation timelines and BI component mapping.
RBI Clarifies Minimum Capital Rules for Operational Risk
The Reserve Bank of India issued the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Second Amendment Directions, 2026, updating the 2025 Directions on Minimum Capital Requirements for Operational Risk. Chapter IV of the original Directions required banks to maintain capital for operational risk based on a Business Indicator (BI), with implementation timelines and mapping of BI components to financial statements to be specified later.
This amendment provides the overdue clarity on the effective date and the indicative mapping of BI components to financial statement schedules. The BI comprises operational income and other revenue-related metrics, and its accurate computation is critical for determining the operational risk capital charge under Basel III standards as adopted in India.
Non-compliance exposes banks to supervisory actions under Section 35 of the Banking Regulation Act, 1949. Legal advisors must ensure client banks align their financial reporting structures with the prescribed mapping to avoid regulatory penalties and capital miscalculation.
