The Reserve Bank of India (RBI) has invited public comments on the draft Credit Valuation Adjustment (CVA) Framework Directions, 2026, aimed at aligning India's banking regulations with the final Basel III standards.

The proposed framework allows eligible banks to adopt the Basic Approach for CVA (BA-CVA) in either its full or simplified version. Banks with an insignificant volume of non-centrally cleared derivatives may alternatively calculate their CVA capital charge as 100 per cent of their counterparty credit risk (CCR) capital charge, in line with Basel guidelines.

The revised framework also clarifies the treatment of CVA hedges, introduces more risk-sensitive supervisory risk weights based on counterparties' sectors and credit quality, and separates systematic and idiosyncratic CVA risk components to improve risk measurement and regulatory consistency.

The RBI has invited comments from regulated entities, market participants, and other stakeholders on the draft directions until August 28, 2026.