RBI revises guidelines for Authorised Dealers on risk management in inter-bank transactions, especially for IFSC Banking Units.
RBI Strengthens Inter-Bank Risk Controls
The Reserve Bank of India, on October 12, 2026, updated its Master Direction on Risk Management and Inter-Bank Dealings, originally dated July 5, 2016. The circular (A.P. (DIR Series) Circular No. 27/2026-27) specifically addresses Authorised Dealer Category-I banks operating International Financial Services Centre (IFSC) Banking Units and Standalone Non-Banking Financial Companies (NBFCs) in GIFT City.
Pursuant to Paragraph 2.3(iii) of Section I, Part A, the revision mandates stricter internal controls, counterparty risk assessments, and stress-testing protocols for inter-bank dealings. Institutions must ensure real-time reporting, enhanced collateral management, and segregation of trading activities to mitigate systemic contagion risks.
The update reflects growing integration of Indian financial markets with global systems. Banks are directed to review compliance frameworks and submit internal audit reports to the Department of Foreign Exchange. These measures aim to uphold market integrity and financial stability in cross-border banking operations.
Citations
- Master Direction - Risk Management and Inter-Bank Dealings, July 5, 2016 (as amended)
