Summary: The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, through Circular No. RBI/2026-27/288, DOR.MRG.REC.No.244/00-00-001/2026-27, dated 7 October 2026. The amendment revises paragraph 52(5)(i)(a) of the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025. RBI has undertaken the revision following a review of the provisions relating to the requirement for clearing member banks to obtain legal opinions, with the stated objective of aligning the regulatory framework with international standards.
The revised provision prescribes a risk weight of 2 per cent for a bank’s trade exposure to a Qualifying Central Counterparty (QCCP) where the bank acts as a clearing member for its own purposes. The prescribed treatment applies to trade exposures arising from over-the-counter (OTC) derivatives transactions, exchange-traded derivatives transactions and securities financing transactions (SFTs). The amendment thereby expressly identifies the relevant transactions and the applicable risk weight for such exposures.
The amendment also addresses situations where a clearing member bank provides clearing services to clients. In such cases, the 2 per cent risk weight applies to the clearing member bank’s trade exposure to the QCCP where the bank is obligated to reimburse its client for losses arising from the specified transactions if the QCCP defaults. The provision therefore links the application of the prescribed risk weight in client clearing arrangements to the clearing member bank’s reimbursement obligation upon a QCCP default.
The Amendment Directions have been issued under Section 35A of the Banking Regulation Act, 1949, together with other enabling statutory provisions. They take effect from the date of issue, 7 October 2026. The changes are relevant to payments banks acting as clearing members of qualifying central counterparties and specify the regulatory capital risk-weight treatment for the identified trade exposures. The notification replaces the specified sub-paragraph of the 2025 Directions without expressly modifying other provisions.
RESERVE BANK OF INDIA
RBI/2026-27/288
DOR.MRG.REC.No.244/00-00-001/2026-27 | Dated: October 7, 2026
Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026
Please refer to paragraph 52(5) (i) of the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025, on the requirement for clearing member banks to obtain legal opinion. On a review, it has been decided to amend these Directions to align them with international standards.
2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (hereinafter called the Act) and all other provisions / laws enabling the Reserve Bank in this regard, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Amendment Directions hereinafter specified.
3. (i) These instructions shall be called the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026.
(ii) These Amendment Directions shall come into effect from the date of issue.
4. The Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025, are amended as provided below.
4.1 In paragraph 52(5)(i), sub-paragraph (a) shall be replaced by the following, namely: –
“(a) Where a bank acts as a clearing member of a QCCP for its own purposes, a risk weight of 2 per cent shall be applied to the bank’s trade exposure to the QCCP in respect of OTC derivatives transactions, exchange traded derivatives transactions, and SFTs. Where the clearing member (bank) offers clearing services to clients, the 2 per cent risk weight also applies to the clearing member’s (bank) trade exposure to the QCCP that arises in cases where the clearing member (bank) is obligated to reimburse the client for any losses on such transactions in the event that the QCCP defaults.”.
(Sunil T S Nair)
Chief General Manager
