RBI issues draft SA‑CCR amendment directions for commercial banks
The Reserve Bank of India has issued draft Reserve Bank of India (Commercial Banks – Forthcoming Instructions) Amendment Directions, 2026, proposing a complete overhaul of the regulatory framework for computing counterparty credit risk (CCR) under the Standardised Approach for Counterparty Credit Risk (SA‑CCR).
These proposed Directions aim to replace the existing Current Exposure Method (CEM)-based approach and align Indian regulations with global prudential standards, recent legislative changes, and updated margining practices for over-the-counter (OTC) derivatives.
The draft Directions are proposed to come into force from April 1, 2027, and the RBI has opened the consultation process to regulated entities, market participants and other stakeholders up to July 1, 2026.
Background: from CEM to SA‑CCR
Existing framework: CEM still in force
Under the current prudential guidelines, commercial banks are required to use the Current Exposure Method (CEM) for determining CCR exposure arising from derivative contracts. CEM is a relatively older methodology and has been globally recognised as less risk‑sensitive compared to SA‑CCR, especially in the context of increasingly complex derivatives portfolios.
2016 SA‑CCR guidelines and deferred rollout
In 2016, the RBI had already finalised and issued two key sets of instructions:
- ‘Guidelines for Computing Exposure for Counterparty Credit Risk arising from Derivative Transactions’, and
- ‘Guidelines on Capital Requirements for Bank Exposures to Central Counterparties’,
both based on the Standardised Approach for Counterparty Credit Risk (SA‑CCR), with an originally intended implementation date of April 1, 2018.
However, implementation of these 2016 guidelines was subsequently put on hold. As a result, banks continued to apply CEM while the SA‑CCR framework remained in the “forthcoming instructions” category for commercial banks.
Why the framework is being revisited now
Key legal and regulatory developments
Since the 2016 issuance of SA‑CCR guidelines, the regulatory and legal landscape around derivatives and netting has evolved significantly. In particular:
Enactment of the Bilateral Netting of Qualified Financial Contracts Act, 2020
- This legislation provides statutory recognition and enforceability of close‑out netting for qualified financial contracts.
- It directly impacts how banks assess exposures under netting and margining arrangements, and therefore how SA‑CCR needs to be operationalised in India.
Implementation of the margining framework under the Reserve Bank of India (Margining for Non-Centrally Cleared OTC Derivatives) Directions, 2024
- These Directions prescribe mandatory margining requirements for non‑centrally cleared OTC derivatives.
- They define requirements for initial margin, variation margin, eligible collateral, segregation of margin, and related risk controls.
- The margining framework has a direct bearing on SA‑CCR exposure calculations, especially for multiple margin agreements and complex netting sets.
Clarifications from the Basel Committee on Banking Supervision (BCBS)
- Over the years, BCBS has issued several FAQs and interpretative clarifications to refine the application of SA‑CCR.
- These clarifications address practical implementation issues, the treatment of specific products, and technical aspects such as effective notional of options and handling of margined trades.
Given these developments, the RBI has undertaken a comprehensive review of the 2016 SA‑CCR guidelines to ensure that the Indian framework is both up‑to‑date and fully integrated with the current legal and regulatory architecture.