RBI issues updated Basel Pillar 3 disclosure framework for banks

According to the RBI, the updated framework aims to promote market discipline through comprehensive public disclosures. The disclosures intend to provide detailed information regarding the capital position and risk exposures of banking entities operating within the country.

The central bank stated that these disclosure requirements apply across all regulated banking entities. Under the regulatory framework, the disclosures apply at the top consolidated level of a banking group, while entities that are not the top group entity must make standalone Pillar 3 disclosures.

Under the revised norms, banks must maintain a formal disclosure policy approved directly by their respective boards of directors. Key policy elements are required to be detailed in the year-end Pillar 3 report, while all disclosed information must undergo internal review and control processes.

The ten amendment directions issued by the central bank cover prudential norms on capital adequacy, asset-liability management, governance, and financial statement presentation for commercial banks, small finance banks, and payments banks.

The central bank also clarified that disclosure templates covering market risk, operational risk, counterparty credit risk, credit valuation adjustment, and leverage ratio for commercial banks will be issued separately at a later stage.

"The Basel Pillar 3 disclosure templates on market risk, operational risk, counterparty credit risk, credit valuation adjustment, and leverage ratio for commercial banks shall be issued separately. Feedback received on these templates will be examined and suitably incorporated at the time of issuance of the respective templates for commercial banks," the RBI said in its release. (ANI)