Amendment to Commercial Banks – Concentration Risk Management Directions

RBI has issued[1] the Reserve Bank of India (Commercial Banks – Concentration Risk Management) Second Amendment Directions, 2026 pursuant to the introduction of the RBI (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026, effective April 1, 2027.

Amendment to Concentration Risk Management Directions

The amendment revises the Explanation to paragraph 131 to clarify that commercial banks must rely upon country risk classifications published by the Export Credit Guarantee Corporation of India Limited (“ECGC”), as amended from time to time, for purposes of country risk assessment.

Key Change: Country Risk Classification Benchmark

Under the revised framework, ECGC classifications are formally recognised as the benchmark for country risk evaluation. Commercial banks must refer to these classifications — as amended from time to time — when conducting concentration risk assessments.

Regulatory Impact

The clarification introduces greater regulatory certainty and standardisation in concentration risk assessment methodologies. Specifically, it achieves the following:

• Provides greater regulatory certainty by designating a single, authoritative source for country risk classifications.
• Promotes standardisation in concentration risk assessment methodologies across commercial banks.
• Formally recognises ECGC classifications as the benchmark for country risk evaluation.

[1] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13380&Mode=0

Last Updated on 27 May, 2026