RBI issues final guidelines on interest rate risk in banking book
PTI, Feb 17, 2023, 7:55 PM IST
Image credit: ANI
Mumbai: The Reserve Bank on Friday issued final guidelines on Interest Rate Risk in Banking Book which require banks to measure, monitor, and disclose their exposure to IRRBB that may impact the capital base and future of earnings of lenders.
IRRBB refers to the current or prospective risk to banks’ capital and earnings arising from adverse movements in interest rates that affect its banking book positions. Excessive IRRBB can pose a significant risk to banks’ current capital base and/or future earnings.
”These guidelines, accordingly, require banks to measure, monitor, and disclose their exposure to IRRBB,” the RBI said in a circular.
The final guidelines on IRRBB are in alignment with the revised framework issued by the Basel Committee on Banking Supervision (BCBS).
The RBI further said the date for implementation of the guidelines will be communicated in due course.
”Banks are advised to be in preparedness for measuring, monitoring, and disclosing their exposure to interest rate risk in the banking book” in terms of the circular, it added.
As per the guidelines, the Board of the banks has the responsibility for understanding the nature and the level of the bank’s IRRBB exposure. The Board should approve broad business strategies as well as overall policies with respect to IRRBB.
Accordingly, the circular said the Board is responsible for ensuring that steps are taken by the bank to identify, measure, monitor and control IRRBB consistent with the approved strategies and policies.
It also said banks should have a clearly defined Board approved risk appetite statement which lays down policies and procedures for limiting and controlling IRRBB.
Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.
Top News
Related Articles More
RBI announces MPC schedule for FY25, first rates decision on April 5
Seven out of ten Indian shoppers say they would happily receive product deliveries without additional packaging
Renault Nissan to launch four new products, expand product portfolio
Sensex, Nifty rebound on heavy buying in Reliance Industries, HDFC Bank
IndiGo to fly more international routes, destinations; aims doubling size by 2030: CEO Pieter Elbers
MUST WATCH
Latest Additions
Union minister Hardeep Puri compares Sunita Kejriwal to Rabri Devi
For ‘Bhoomi Putra’ Kharge, prestigious LS poll battle in Karnataka
Special court convicts 7 people in BSP MLA Raju Pal murder case
LS polls: More than 79,000 violations reported so far through C-Vigil app, says EC
EAM Jaishankar meets Ukranian counterpart Kuleba