Key modifications incorporated in the definitive Directions relative to the preliminary guidelines:
(1) Trading Book Definition: Given the Investment Directions delineate a readily ascertainable trading book via the ‘Held for Trading (HFT)’ accounting classification, the definitional instructions pertaining to the trading book have been excised from the final Directions, with a cross-reference established to the Investment Directions.
(2) Net Open Position and Foreign Exchange Risk Capital Charge: Amended instructions, as stipulated in the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Tenth Amendment Directions, 2026, have been appropriately integrated.
(3) Specific Risk Capital Charge for Interest Rate Risk: The specific risk capital tables pertaining to interest rate risk have undergone revision to conform with the Basel Committee on Banking Supervision (BCBS) guidelines, facilitating a more streamlined and succinct methodology.
(4) Debt Mutual Funds / Exchange Traded Funds (ETF) Held in the Trading Book: The capital treatment has been recalibrated to ensure capital computation is predicated on the fundamental risk factors while maintaining robust risk mitigation protocols.
(5) Specific Risk Capital Requirement for Positions Hedged by Credit Derivatives: The instructions have been revised to encompass the treatment of positions hedged by total return swaps, permissible under the Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2026. The next review is scheduled for 2026, with initial assessments due by 3, followed by a comprehensive evaluation in 4, and a final report by 5. Projections indicate a potential recalibration in 2026. The framework will be assessed again in 2027, 1, and 2027, 1.