RBI issues Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Second Amendment Directions, 2026 on Minimum Capital Requirements for Operational Risk
Distilled Policy Brief
- The updated directions incorporate clarifications issued by the Basel Committee on Banking Supervision regarding the Basel III Standardised Approach for minimum operational risk regulatory capital requirements.
🎯 Prelims High-Yield Examination Points
The revised Basel III capital adequacy framework applies to Commercial Banks, but excludes Small Finance Banks (SFBs), Payment Banks (PBs), and Regional Rural Banks (RRBs).
⚖️ Mains Analytical & Syllabus Linkages
Examine the significance of updating operational risk regulatory capital requirements under the Basel III framework for strengthening the financial resilience of commercial banks in India.
🎯 UPSC Prelims Practice Drill
With reference to the Reserve Bank of India’s updated directions on the Basel III capital adequacy framework for Minimum Capital Requirements for Operational Risk, consider the following statements: 1. The revised capital adequacy framework applies uniformly to all commercial banks, including Small Finance Banks, Payment Banks, and Regional Rural Banks. 2. The updated instructions incorporate the Standardised Approach (Basel III SA) formulated by the Basel Committee on Banking Supervision for operational risk. 3. The revised Basel III capital adequacy framework for commercial banks will come into effect from April 01, 2027. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is incorrect because the revised Basel III framework specifically excludes Small Finance Banks (SFBs), Payment Banks (PBs), and Regional Rural Banks (RRBs). Statements 2 and 3 are correct as the updated directions adopt the Basel Committee on Banking Supervision's Standardised Approach (Basel III SA) for operational risk requirements, which will take effect from April 01, 2027.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.