RBI Proposes Revised CVA Framework Under Basel III for Indian Banks
The Reserve Bank of India (RBI) has proposed a revised framework for Credit Valuation Adjustment (CVA) to enhance the risk sensitivity of capital requirements for derivative exposures. This move aligns Indian regulations with the global Basel III standards. The draft framework introduces a simplified calculation methodology for banks with lower derivatives exposure, aiming to reduce compliance burdens while maintaining financial stability. The existing CVA framework, based on the Basel Committee on Banking Supervision's 2010 standards, is being updated to reflect the latest Basel III guidelines. The RBI's proposal includes greater differentiation in supervisory risk weights based on counterparties' sector and credit quality, improving the accuracy of capital requirements. 
