RBI issued the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Second Amendment Directions, 2026, revising minimum capital requirements for operational risk. The change impacts capital planning and risk provisioning.
RBI Updates Operational Risk Capital Norms
On October 23, 2026, the Reserve Bank of India issued the Second Amendment Directions, 2026, under the Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Directions, 2025, revising Chapter IV on Minimum Capital Requirements for Operational Risk. The amendment recalibrates risk-weighted asset (RWA) calculations for operational risk exposures.
The revised framework introduces a hybrid approach combining the Basic Indicator Method (BIM) and Standardised Measurement Approach (SMA), with increased weightage for high-impact, low-frequency events. Banks are required to submit updated Pillar 3 disclosures by March 2027, incorporating scenario-based stress testing for cyber incidents and third-party vendor risks.
These changes will affect capital planning strategies and internal audit functions. Legal teams must review stress testing methodologies and board governance disclosures under the amended framework. The update aligns with Basel Committee guidelines and reinforces prudential regulation in light of rising digital banking risks.
