The RBI has issued the Second Amendment to Commercial Banks – Miscellaneous Directions, 2026, revising exposure limits for non-option derivatives. The move strengthens risk governance.
RBI Amends Derivative Rules for Commercial Banks
The Reserve Bank of India has issued the Commercial Banks – Miscellaneous (Second Amendment) Directions, 2026, effective October 19, 2026, amending Section C on 'Limits for Non-Option Derivative Contracts' in Chapter IV of the 2025 Directions. Like the parallel update for Small Finance Banks, this amendment is also issued under Section 35A of the Banking Regulation Act, 1949.
The changes refine position limits and introduce dynamic caps linked to capital strength, with differentiated thresholds for domestic-systemically important banks (D-SIBs) and others. The RBI noted that over-the-counter (OTC) derivatives remain a key area of monitoring due to counterparty concentration and valuation complexities.
Additional reporting requirements are introduced for trades exceeding 75% of approved limits. Banks must file half-yearly reports to the Internal Market Risk Control Committee and the RBI’s Department of Supervision.
Legal and compliance teams in commercial banks must assess revised trading frameworks, particularly in treasury operations. The amendments signal tightened regulatory scrutiny on market conduct and capital adequacy in volatile environments.
Citations
- RBI/2026-27/294
- Banking Regulation Act, 1949, Section 35A
