The Reserve Bank of India (RBI) has released draft amendment directions on the Standardised Approach for Counterparty Credit Risk (SA-CCR) and invited comments from regulated entities, market participants, and other stakeholders until July 1, 2026.

The proposed framework aims to replace the existing Current Exposure Method (CEM) used by banks for calculating counterparty credit risk exposure arising from derivative transactions. While RBI had issued SA-CCR-based guidelines in 2016, their implementation was deferred. The latest draft incorporates significant legal, regulatory, and market developments that have taken place since then.

Key changes proposed in the revised framework include greater clarity on the scope of counterparty credit risk across both banking and trading book exposures, detailed guidance on the treatment of multiple margin agreements and netting arrangements, and specific provisions for transactions where banks act as clearing members on SEBI-recognized exchanges in equity and commodity derivatives segments.

The draft also addresses the treatment of deferred option premiums, provides guidance on calculating effective notional amounts for options, and introduces disclosure templates related to SA-CCR implementation.

According to the RBI, the review was undertaken in light of the enactment of the Bilateral Netting of Qualified Financial Contracts Act, 2020, the implementation of margining regulations for non-centrally cleared OTC derivatives, and further clarifications issued by the Basel Committee on Banking Supervision over the years.

The proposed framework is expected to strengthen risk measurement practices, align Indian banking regulations with global standards, and enhance transparency in the management of counterparty credit risk.