Summary: The Reserve Bank of India (RBI) has issued the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026, through Circular No. RBI/2026-27/289, DOR.MRG.REC.No.245/21-01-002/2026-27, dated 7 October 2026. The amendment modifies paragraph 77(6)(i)(a) of the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Directions, 2025. RBI has undertaken this revision following a review of the existing provisions relating to clearing member financial institutions and the requirement to obtain legal opinions, with the objective of aligning the regulatory framework with international standards.
The amended provision specifies that where an All India Financial Institution acts as a clearing member of a Qualifying Central Counterparty (QCCP) for its own purposes, a risk weight of 2 per cent shall apply to its trade exposure to the QCCP. This treatment covers over-the-counter (OTC) derivatives transactions, exchange-traded derivatives transactions and securities financing transactions (SFTs). Accordingly, the amendment expressly identifies the transactions and clearing arrangements eligible for the prescribed risk weight.
The amendment further clarifies the treatment of clearing members providing clearing services to clients. Where an AIFI acts as a clearing member and offers such services, the 2 per cent risk weight also applies to its trade exposure to the QCCP in cases where the AIFI is obligated to reimburse its client for losses arising from the relevant transactions if the QCCP defaults. Thus, the applicability of the specified risk weight to client clearing arrangements is expressly linked to the clearing member’s reimbursement obligation in the event of a QCCP default.
The Directions have been issued under Section 45L of the Reserve Bank of India Act, 1934, along with other enabling statutory provisions. They come into effect from the date of issue, namely 7 October 2026. The amendment is relevant to AIFIs undertaking derivatives and securities financing transactions through qualifying central counterparties, particularly for determining the regulatory capital treatment of their trade exposures. The amendment replaces only the specified sub-paragraph of the 2025 Directions.
RESERVE BANK OF INDIA
RBI/2026-27/289
DOR.MRG.REC.No.245/21-01-002/2026-27 | Dated: October 07, 2026
Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026
Please refer to paragraph 77(6) (i) of the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Directions, 2025, on the requirement for clearing member financial institutions 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 45L of the Reserve Bank of India Act, 1934, and all other provisions / laws enabling the Reserve Bank of India (RBI) in this regard, RBI 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 (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026.
(ii) These Amendment Directions shall come into effect from the date of issue.
4. The Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Directions, 2025, are amended as provided below.
4.1 In paragraph 77(6)(i), sub-paragraph (a) shall be replaced by the following, namely: –
“(a) Where an AIFI acts as a clearing member of a QCCP for its own purposes, a risk weight of 2 per cent shall be applied to the AIFI’s trade exposure to the QCCP in respect of OTC derivatives transactions, exchange traded derivatives transactions, and SFTs. Where the clearing member (AIFI) offers clearing services to clients, the 2 per cent risk weight also applies to the clearing member’s (AIFI) trade exposure to the QCCP in cases where the clearing member (AIFI) 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
