Capital norms for operational risks of banks to be revised: RBI

The revised directions will apply to all commercial banks in India

The Reserve Bank of India (RBI) will introduce revised norms for banks for setting aside capital for operational risks from April 01, 2023, to ensure robustness in working of banking entities.

The proposed rules termed the new standardised approach, which is Basel III-compliant, will replace existing approaches like basic Indicator Approach (BIA), and Advanced Measurement Approach (AMA) to measure minimum operational risk capital requirements.

For the purpose of these revised directions operational risks means the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational