RBI (Commercial Banks Concentration Risk Management)

When reading RBI (Commercial Banks Concentration Risk Management), the important part is to keep the core facts intact while presenting the context in a clearer way for readers.

What This Update Means

Readers should treat this as a tax and compliance update, not as personal advice.

Key Reader Takeaways

• The issue was inconsistent methods for evaluating sovereign risk exposure.
• RBI mandated use of ECGC country risk classifications for uniform concentration risk management….
• The Reserve Bank of India issued the Commercial Banks – Concentration Risk Management Second Amendment Directions, 2026 under Section 35A of the Banking Regulation Act, 1949, following related updates to asset classification and provisioning norms.
• The amendment revises paragraph 131 by replacing the reference framework for country risk classification with ratings published by the Export Credit Guarantee Corporation of India Limited (ECGC), as updated from time to time.

LAMORC DIGITAL Context

The detailed section below preserves the source-backed information so readers can review the full context and important details in one place.

The Reserve Bank of India issued the Commercial Banks – Concentration Risk Management Second Amendment Directions, 2026 under Section 35A of the Banking Regulation Act, 1949, following related updates to asset classification and provisioning norms. The amendment revises paragraph 131 by replacing the reference framework for country risk classification with ratings published by the Export Credit Guarantee Corporation of India Limited (ECGC), as updated from time to time. This change standardizes how banks assess sovereign and country exposure risks for concentration risk management purposes. The updated framework will come into effect from April 1, 2027, ensuring alignment between credit risk assessment, regulatory standards, and external risk rating systems. The amendment strengthens prudential oversight by improving consistency, transparency, and reliability in evaluating cross-border banking exposures and safeguarding financial stability.

Reserve Bank of India

RBI/2026-27/27 DOR.STR.REC.08/07-03-001/2026-27 | Dated: April 27, 2026

Reserve Bank of India (Commercial Banks – Concentration Risk Management) – Second Amendment Directions, 2026

Please refer to Reserve Bank of India (Commercial Banks – Concentration Risk Management) Directions, 2025 (hereinafter referred to as ‘the Directions’).

2. Consequent to the issuance of Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026 and in exercise of the powers conferred by the section 35A of the Banking Regulation Act, 1949 and all other 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. The Amendment Directions modify Explanation to paragraph 131 as below:

“Explanation: For this purpose, a bank shall refer to the country risk classifications as published by the Export Credit Guarantee Corporation of India Limited (ECGC), as amended from time to time.”

4. The above amendments shall come into force from April 01, 2027.

(Vaibhav Chaturvedi) Chief General Manager

Readers should treat this as a tax and compliance update, not as personal advice.

This article is for general information based on available source information. It should not be considered legal, tax, investment, or financial advice.