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RBI Prescribes Minimum Capital for Market Risk in Commercial Banks
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Reserve Bank of Indiabankingfinancial_regulation

RBI Prescribes Minimum Capital for Market Risk in Commercial Banks

September 26, 2026

New RBI directions mandate capital requirements for market risk in commercial banks, defining trading book boundaries and risk measurement standards.

RBI Prescribes Minimum Capital for Market Risk in Commercial Banks

The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks - Minimum Capital Requirements for Market Risk) Directions, 2026, dated September 21, 2026. The framework establishes capital adequacy norms for banks' exposure to market risks arising from trading activities.

The directions define the scope of the trading book, set reclassification restrictions between banking and trading books, and prescribe internal models for value-at-risk (VaR) and stress testing. These align with Basel III standards and enhance prudential supervision.

Compliance requires banks to maintain sufficient capital buffers against market volatility. Legal and risk teams must review the delineation between banking and trading books, as misclassification may lead to supervisory actions. This is a key regulatory upgrade affecting capital planning and risk governance in commercial banks.

Practice Areas:bankingfinancial_regulation

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