The RBI has issued the Commercial Banks – Forthcoming Instructions Second Amendment Directions, 2026, revising minimum capital requirements for operational risk. The changes update prudential norms under the Banking Regulation Act, 1949.
RBI Amends Capital Risk Rules for Banks
The Reserve Bank of India has issued the Commercial Banks – Forthcoming Instructions (Second Amendment) Directions, 2026, effective October 23, 2026, amending Chapter IV relating to Minimum Capital Requirements for Operational Risk. The amendment is issued under powers conferred by Section 35A of the Banking Regulation Act, 1949, and further refines the operational risk capital framework introduced in the 2025 Directions.
The revision responds to a review of risk profiles and supervisory feedback, aiming to better align capital buffers with evolving operational risks in digital banking, third-party vendor dependencies, and cyber resilience. While the core methodology remains unchanged, recalibration of severity and exposure factors is expected to impact smaller banks disproportionately.
These directions apply to all commercial banks and are part of a broader regulatory shift toward granular risk-based supervision. Institutions must reassess internal capital adequacy assessment processes (ICAAP) in light of the updated calibration.
Banking counsel should advise clients on compliance timelines and review any pending internal audits or risk validations affected by the revised capital benchmarks.
Citations
- RBI/2026-27/299
- Banking Regulation Act, 1949, Section 35A
