RBI issues Basel III capital rules for market risk, effective 1 April 2027
The Reserve Bank of India's Commercial Banks - Minimum Capital Requirements for Market Risk Directions, 2026, dated 21 September 2026, set new capital rules for interest rate, equity and foreign-exchange risk, effective 1 April 2027.
The Reserve Bank of India (RBI) has issued new rules on how much capital commercial banks must hold against market risk, aligning India’s framework with the Basel Committee’s revised standards. The Reserve Bank of India (Commercial Banks - Minimum Capital Requirements for Market Risk) Directions, 2026, dated 21 September 2026, take effect on 1 April 2027.
What the Directions cover
According to the notification (RBI/DOR/2026-27/472, also quoted with reference DOR.MRG.REC.227/21-01-002/2026-27 by TaxGuru):
- Who it applies to. All commercial banks as defined under the Banking Regulation Act, 1949 — excluding Small Finance Banks, Payments Banks and Local Area Banks.
- What risk it covers. Capital requirements for three market-risk categories: interest rate risk, equity risk, and foreign-exchange risk (which includes gold and other precious metals).
- How capital is calculated. Banks are to use the Simplified Standardised Approach (SSA), under which the capital requirement is the simple sum of the capital charges for the three risk classes. Risk-weighted assets for market risk are then calculated by multiplying that capital requirement by a factor of 12.5.
- What it replaces. From the effective date, Section D (except sub-section D.8), “Capital charge for market risk,” of Chapter IV, “Risk weighted assets (RWAs),” of the Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Directions, 2025 stands repealed.
Key facts
| Item | Detail |
|---|---|
| Instrument | Commercial Banks - Minimum Capital Requirements for Market Risk Directions, 2026 |
| Issued by | Reserve Bank of India |
| Date of Directions | 21 September 2026 |
| Effective from | 1 April 2027 |
| Applies to | Commercial banks (banking companies, corresponding new banks, SBI); excludes Small Finance Banks, Payments Banks, Local Area Banks |
| Methodology | Simplified Standardised Approach (SSA); risk-weighted assets = capital requirement x 12.5 |
| Repeals | Section D (except D.8) of Chapter IV of the 2025 Prudential Norms on Capital Adequacy Directions |
Background
The RBI has been working towards aligning bank capital rules with the Basel Committee on Banking Supervision’s revised market-risk framework for several years; draft guidelines on the subject were first put out for comment before this final version. The Directions give banks a lead time of more than six months between issue and the 1 April 2027 effective date to prepare their systems and reporting.
The Directions deal only with how much capital a bank must set aside against market-risk exposures. They do not change deposit or lending interest rates, and they do not comment on the health or rating of any individual bank.
Basis of these figures
The circular number, effective date, exclusion list, SSA methodology, the 12.5 multiplier and the exact repeal clause are all confirmed directly from RBI’s own notification, Reserve Bank of India (Commercial Banks - Minimum Capital Requirements for Market Risk) Directions, 2026. TaxGuru’s summary is cited as a secondary cross-check.