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The Reserve Bank of India (RBI) has proposed to replace existing approaches for measuring minimum operational risk capital requirements of banks with a new Basel-III standardised approach.

'Operational risk' refers to the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The central bank on Wednesday issued the 'Draft Master Direction on Minimum Capital Requirements for Operational Risk' as part of the convergence of its regulations for banks with Basel-III standards.

The RBI has sought comments on the draft by 31 January next year.

All existing approaches including, the Basic Indicator Approach (BIA), The Standardised Approach (TSA)/ Alternative Standardised Approach (ASA) and Advanced Measurement Approach (AMA) for measuring minimum operational risk capital requirements, are proposed to be replaced by the new standardised approach (Basel-III Standardised Approach).

The RBI aims to put the modified norms in place from April 1, 2023.

Meanwhile, in a circular, the central bank said any payment bank or small finance bank that intends to undertake the government agency business may be appointed as an agent of the RBI upon execution of an agreement with it.

The decision, the central bank said, has been taken in consultation with the Finance Ministry.

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