DRAFT FOR COMMENTS

RBI/2025-26/--
DOR.LRG.No./ 00-00-020/2025-26

XX, 2025

Reserve Bank of India (Payments Banks – Asset Liability Management) Directions, 2025

In exercise of the powers conferred by sub section (2) of Section 27, and Section 35A of the Banking Regulation Act, 1949, the Reserve Bank of India, being satisfied that it is necessary and expedient in public interest to do so, hereby, issues the Directions hereinafter specified.

Chapter I- Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Payments Banks – Asset Liability Management) Directions, 2025.

2. These Directions shall come into effect from the date of issue.

B. Applicability

3. The provisions of these Directions shall be applicable to Payments Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank').
These Directions shall become effective from the date of issue.

C. Definitions

4. In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them below:

(1) ‘Business Day’ means the opening hours of the Large Value Payment System (LVPS) or of correspondent banking services during which a bank can receive and make payments in a local jurisdiction.

Explanation: An LVPS is a funds transfer system that typically handles large-value and high-priority payments. In India, Real Time Gross Settlement System (RTGS) is an LVPS.

(2) ‘Cash Reserve Ratio (CRR)’ shall have the same meaning as a bank defined in the Reserve Bank of India (Payments Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025.

(3) ‘Government security’ shall have the same meaning as assigned to it in section 2(f) of the Government Securities Act, 2006.

(4) ‘Interest Rate Risk’ means the risk where changes in market interest rates might adversely affect a bank's financial condition.

(5) ‘Intraday Liquidity’ means funds which can be accessed during the business day, usually to enable a bank to make payments in real time.

(6) ‘Intraday Liquidity Risk’ means the risk that a bank fails to manage its intraday liquidity effectively, which could leave it unable to meet a payment obligation at the time expected, thereby affecting its own liquidity position and that of other parties.

(7) ‘Funding Liquidity Risk’ means the risk that a bank will not be able to meet efficiently the expected and unexpected current and future cash flows and collateral needs without affecting either its daily operations or its financial condition.

(8) ‘Marginal Standing Facility (MSF)’ shall mean the facility as mentioned in RBI press release dated September 30, 2025. 

(9) ‘Market Liquidity Risk’ means the risk that a bank cannot easily offset or eliminate a position at the prevailing market price because of inadequate market depth or market disruption.

(10) ‘Modified Duration’ means the approximate percentage change in value of an asset or liability for a 100-basis point change in the rate of interest.

(11) ‘Statutory Liquidity Ratio (SLR)’ shall have the same meaning as defined in Reserve Bank of India (Payments Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025.

(12) ‘Time-specific obligations’ means the obligations which must be settled at a specific time within the day or have an expected intraday settlement deadline.

(13) ‘Unencumbered’ means free of legal, regulatory, contractual or other restrictions on the ability of the bank to liquidate, sell, transfer or assign an asset.

5. All other expressions unless defined herein shall have the same meaning as have been assigned to them under the BR Act, the RBI Act, rules/regulations made thereunder, or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be.

Chapter II - Role of the Board

A. Responsibilities of the Board

6. The Board of Directors (The Board) shall be responsible for overall management of liquidity risk, and shall decide the strategy, policies and procedures of the bank to manage liquidity risk in accordance with the liquidity risk tolerance/ limits.

7. The Board shall have a clear understanding of the bank’s liquidity risk, including the liquidity risk profile of all its branches and associates (both domestic and overseas).

8. The Board shall ensure that risk tolerance is understood at all levels of management.

9. The Board shall establish executive level authority and responsibility for liquidity risk, management, enforce management’s duties to identify, measure, monitor, and manage liquidity risk and formulates/ reviews the Contingency Funding Plan (CFP).

B. Approval of policies, limits and reviews

10. The Board or its Committee shall oversee the establishment and approval of policies, strategies and procedures to manage liquidity risk, and review them at least annually. The Board shall also approve the policy regarding inclusion and monitoring of only those intraday liquidity sources which are freely and readily available to the bank at the start of the day.

11. The Board shall approve the internal limits for liquidity stock ratios, based on its liquidity risk management capabilities, experience, and risk profile. It shall also set an explicit liquidity risk tolerance, which shall define the level of liquidity risk that the bank is willing to assume and reflect the bank’s financial condition and funding capacity.

12. The Board shall periodically review information necessary to maintain its understanding of liquidity risk, the key assumptions used in setting the liquidity risk tolerance, contingency plans for their effectiveness and operational feasibility at least on an annual basis.

13. The Board or Risk Management Committee shall inter-alia approve the internal prudential limits for cumulative mismatches across all time buckets of structural liquidity statement for monitoring by bank, as also approve appropriate internal limits on Earnings at Risk (EaR) and volatility in the Market Value of Equity (MVE), based on bank’s risk bearing and risk management capacity.

14. The Board/ ALCO shall periodically review the internal limits after assessing various scenarios of interest rates and the resultant volatility of earnings in terms of Net Interest Income and volatility in Net Worth.

15. A reliable MIS designed to provide timely and forward-looking information on the liquidity position of the bank and the Group, under normal and stress situations, shall be presented before the Board and ALCO.

16. Any vulnerability in the stress test results shall be reported to the Board and Board shall ensure that a plan of action is charted out immediately.

17. The Board shall ensure that the bank:

(1) develops and adopts a suitable intraday liquidity strategy that enables the bank to:

• i. monitor and measure expected daily gross liquidity inflows and outflows.

• ii. ensure availability of sufficient intraday funding to meet its payment obligations.

• iii. manage unexpected disruptions to its liquidity flows.

• iv. effectively manage collateral as integral part of intraday liquidity strategy.

(2) establishes suitable policies, procedures, practices, and systems to support the intraday liquidity risk management in all financial markets and currencies in which it has significant payment and settlement flows, including when it chooses to rely on correspondents or custodians to conduct payment and settlement activities.

18. The Board shall approve the risk tolerance of individual business lines, for the bank to align the risk-taking incentives and the liquidity risk exposure of each business line.

Chapter III - Liquidity Risk Management

A. Introduction

19. A bank’s liquidity is its capacity to fund increase in assets and meet both expected and unexpected cash and collateral obligations at reasonable cost and without incurring unacceptable losses. The inability of a bank to meet such obligations as they become due, without adversely affecting the bank’s financial condition, creates liquidity risk. Effective liquidity risk management helps ensure a bank’s ability to meet its obligations as they fall due and reduces the probability of an adverse situation developing. This assumes significance on account of the fact that liquidity crisis, even at a single institution, can have systemic implications. Liquidity risk for a bank mainly manifests on account of Funding Liquidity Risk and Market Liquidity Risk.

20. After the global financial crisis, in recognition of the need for a bank to improve its liquidity risk management, the Basel Committee on Banking Supervision (BCBS) published “Principles for Sound Liquidity Risk Management and Supervision” in September 2008 and subsequently reviewed in January 2019 (https://www.bis.org/press/p190117.htm). The broad principles as envisaged by BCBS have been provided in Annex-I along with guidance on sound liquidity risk management for a bank.

B. Governance of Liquidity Risk Management

21. Successful implementation of liquidity risk management process shall emanate from the Top Management in a bank with the demonstration of its strong commitment to integrate basic operations and strategic decision making with risk management. The organisational set up for liquidity risk management shall be as under:

• (1) Board of Directors (Board)

• (2) Risk Management Committee (RMC)

• (3) Asset-Liability Management Committee (ALCO)

• (4) Asset Liability Management (ALM) Support Group

22. The Board shall be responsible for overall management of liquidity risk. The Board shall decide the strategy, policies and procedures of the bank to manage liquidity risk in accordance with the liquidity risk tolerance/ limits as detailed in paragraphs 46 to 48 of the Directions. The Board shall ensure that the risk tolerance is clearly understood at all levels of management. The Board shall also ensure that it understands the nature of the liquidity risk of the bank including liquidity risk profile of all branches and associates (both domestic and overseas), periodically reviews information necessary to maintain this understanding, establishes executive-level lines of authority and responsibility for managing the bank’s liquidity risk, enforces management’s duties to identify, measure, monitor, and manage liquidity risk and formulates/ reviews the Contingent Funding Plan.

23. RMC, which reports to the Board, consisting of Chief Executive Officer (CEO)/ Chairman and Managing Director (CMD) and heads of credit, market and operational risk management committee, shall be responsible for evaluating liquidity risk faced by a bank. RMC shall also include the potential interaction of liquidity risk with other risks in the risks addressed by it.

24. ALCO shall be responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing the liquidity risk management strategy of the bank in line with a bank’s decided risk management objectives and risk tolerance.

25. The size (number of members) of ALCO will depend on the size of institution, business mix and organizational complexity. ALCO shall be headed by the CEO/CMD or the Executive Director (ED) of a bank. Its members may include the Heads of Investment, Credit and Strategy, Treasury, International Banking, Risk Management and Economic Research and other members as deemed suitable.

26. ALCO shall perform the following functions with respect to the liquidity risk of the bank:

• (1) Decide on desired maturity profile and mix of incremental assets and liabilities.

• (2) Decide on source and mix of liabilities or sale of assets. Towards this end, it shall develop a view on future direction of interest rate movements and decide on funding mix between fixed v/s floating rate funds, wholesale v/s retail deposits, money market v/s capital market funding and domestic v/s foreign currency funding. ALCO shall be aware of the composition, characteristics and diversification of a bank’s assets and funding sources and shall regularly review the funding strategy in the light of any changes in the internal or external environments.

• (3) Determine the structure, responsibilities and controls for managing liquidity risk, oversee the liquidity positions of all branches and legal entities like joint ventures and associates in which a bank is active and outline these elements clearly in the bank’s liquidity policy.

• (4) Ensure operational independence of Liquidity Risk Management function, with adequate support of skilled and experienced officers.

• (5) Ensure adequacy of cash flow projections and the assumptions used.

• (6) Review the stress test scenarios including the assumptions as well as the results of the stress tests and ensure that a well-documented Contingency Funding Plan (CFP) is in place which is reviewed periodically.

• (7) Decide the transfer pricing policy of the bank and making liquidity costs and benefits an integral part of bank’s strategic planning.

• (8) Report bank’s liquidity risk profile regularly to the Board/ RMC.

27. ALCO shall have a thorough understanding of the close links between Funding Liquidity Risk and Market Liquidity Risk, as well as how other risks including credit, market, operational and reputational risks affect the bank’s overall liquidity risk strategy. ALCO shall identify events that could have an impact on market and public perceptions about bank’s soundness and reputation.  

28. The ALM Support Group consisting of operating staff shall be responsible for analysing, monitoring and reporting the liquidity risk profile to the ALCO. The group shall prepare forecasts and simulations to assess the impact of various possible changes in market conditions on a bank’s liquidity position and recommend action needed to be taken to maintain the liquidity position and ensure adherence to bank’s internal limits.

C. Liquidity Risk Management Policy

29. A bank shall put in place an effective liquidity risk management policy, which inter alia, shall spell out the liquidity risk tolerance, funding strategies, prudential limits, system for measuring, assessing and reporting/ reviewing liquidity, framework for stress testing, liquidity planning under alternative scenarios/ formal contingent funding plan, nature and frequency of management reporting and periodical review of assumptions used in liquidity projection. The policy shall also address liquidity risk for individual currencies; legal entities including joint ventures, and associates; and business lines, when appropriate and material, and shall place limits on transfer of liquidity keeping in view the regulatory, legal and operational constraints.

30. The Board or its delegated committee of board members shall oversee the establishment and approval of policies, strategies and procedures to manage liquidity risk, and review them at least annually.

31. A bank shall have a sound process for identifying, measuring, monitoring and mitigating, along with a strategy for managing liquidity risk management.

D. Strategy for Managing Liquidity Risk

32. The strategy for managing liquidity risk shall be appropriate for the nature, scale and complexity of a bank’s activities. In formulating the strategy, a bank/ banking group shall take into consideration its legal structures, key business lines, the breadth and diversity of markets, products, jurisdictions in which it operates and home and host country regulatory requirements. The strategy shall identify primary sources of funding to meet daily operating cash outflows, as well as expected and unexpected cash flow fluctuations.

E. Identification

33. A bank shall define and identify the liquidity risk to which it is exposed for each major on and off-balance sheet position. The identification process shall include the effect of embedded options and other contingent exposures that may affect the bank’s sources and uses of funds. Liquidity risk shall be identified for all currencies in which a bank is active.

F. Risk Measurement – Flow Approach

34. Liquidity can be measured through stock and flow approaches. Flow approach measurement involves comprehensive tracking of cash flow mismatches. A bank shall adopt the format of the structural liquidity statement (SLS), provided in Annex-II of the Directions, for tracking cash flow mismatches at different time buckets, for measuring and managing net funding requirements. The cash flows shall be placed in different time buckets based on the residual maturity of the cash flows or the projected future behaviour of assets, liabilities and off-balance sheet items. The difference between cash inflows and outflows in each time period shall be starting point for the measure of the bank’s future liquidity surplus or deficit, at a series of points of time.

35. A bank shall prepare domestic SLS (INR) on a daily basis and report to RBI on a fortnightly basis. Further, SLS in respect of overseas operations shall be reported to RBI on quarterly basis. SLS shall include five parts:

• (1) Domestic Currency – Indian Operations

• (2) Foreign Currency – Indian Operations

• (3) Combined Indian Operations – Domestic and Foreign Currency i.e. solo bank level

• (4) Overseas branch Operations–Country-Wise

• (5) For Consolidated Bank Operations

• (6) The guidance for slotting the future cash flows of a bank in the time buckets has been provided in Annex-IV.

36. A bank shall analyse the behavioural maturity profile of various components of on/off-balance sheet items on the basis of assumptions and trend analysis supported by time series analysis. The behavioural analysis, for example, may include the proportion of maturing assets and liabilities that the bank can rollover or renew, the behaviour of assets and liabilities with no clearly specified maturity dates, potential cash flows from off-balance sheet activities, including draw down under loan commitments, contingent liabilities and market related transactions.

37. A bank shall undertake variance analysis, at least once in six months to validate the assumptions used in the behavioral analysis. The assumptions shall be fine-tuned over a period which facilitate near reality predictions about future behaviour of on/ off-balance sheet items.

38. A bank shall also track the impact of prepayments of loans, premature closure of deposits and exercise of options built in certain instruments which offer put/ call options after specified times. Cash outflows can be ranked by the date on which liabilities fall due, i.e., the earliest date a liability holder could exercise an early repayment option, or the earliest date contingencies could be crystallised.

39. The assumptions used in projections of cash flows and measuring liquidity risk, shall be reasonable, appropriate and adequately documented. They shall also be periodically reviewed by the Board/ RMC.

G. Risk Measurement – Stock Approach

40. A bank may consider measures/ ratios in this regard. Some illustrative stock ratios with their significance in liquidity risk management are given in the table below. A bank may also use other measures/ ratios.

41. A bank may monitor liquidity risk by putting in place an internally defined limits approved by the Board for such measures/ ratios. Such limits should be based on its liquidity risk management capabilities, experience and risk profile. Such measures/ratios may be used to monitor the liquidity risk in INR and in major currencies at the solo bank level.

Explanation: A bank may refer to the following guidance for computation of above ratios:

• (i) Volatile Liabilities: (i) (Deposits + borrowings and bills payable up to 1 year). Borrowings include from RBI, call, other institutions and refinance. Current deposits (CA) and Savings deposits (SA) i.e. (CASA) deposits reported by a bank as payable within one year (as reported in SLS) are included under volatile liabilities. (ii) Letters of credit – full outstanding. (iii) Component-wise Credit Conversion Factor of other contingent credit and commitments. (iv) Swap funds (buy/ sell) up to one year.

• (ii) Temporary assets =Cash + Excess CRR balances with RBI + Balances with a bank + Bills purchased/discounted up to 1 year + Investments up to one year + Swap funds (sell/ buy) up to one year.

• (iii) Earning Assets = Total assets – (Fixed assets + Balances in current accounts with other a bank + Other assets excluding leasing + Intangible assets)

• (iv) Core deposits = All deposits (including CASA) above 1 year (as reported in SLS) + Net Worth

H. Risk Monitoring

42. While the mismatches in SLS up to one year would be relevant, since these provide early warning signals of impending liquidity problems, the main focus shall be on the short-term mismatches i.e., up to 30 days. A bank shall also monitor cumulative mismatches across all time buckets by setting internal prudential limits, with the approval of the Board or the RMC.

43. The net cumulative negative mismatches in the domestic and overseas SLS (Refer Annex-II - Part A1 and Part B of Liquidity Return) during the next day, 2-7 days, 8-14 days and 15-30 days bucket shall not exceed 5 per cent, 10 per cent, 15 per cent and 20 per cent of the cumulative cash outflows in the respective time bucket. A bank shall also adopt the above cumulative mismatch limits for its SLS for consolidated bank operations (Annex -II – Part C).

I. Liquidity Across Currencies

44. A bank shall have a measurement, monitoring and control system for liquidity positions in the major currencies in which it is active. For assessing the liquidity mismatch in foreign currencies, as far as domestic operations are concerned, a bank shall prepare Part A2 of Liquidity Return as provided in Annex-II of the Directions. For slotting the various items of assets and liabilities in SLS, bank shall refer to the guidance provided in Annex V of the Directions. In addition to assessing its aggregate foreign currency liquidity needs and the acceptable mismatch in combination with its domestic currency commitments, a bank shall also undertake separate analysis of its strategy for each major currency individually by taking into account the outcome of stress testing.

45. The assessment of foreign currency mismatches by a bank shall take into account:

• (1) bank’s ability to raise funds in foreign currency markets.

• (2) the likely extent of foreign currency back-up facilities available in its domestic market.

• (3) the ability to transfer liquidity surplus from one currency to another, and across countries/ jurisdictions and legal entities and

• (4) the likely convertibility of currencies in which the bank is active, including the potential for impairment or complete closure of foreign exchange swap markets for particular currency pairs.

J. Liquidity Risk Tolerance

46. A bank’s Board shall set an explicit liquidity risk tolerance, which shall define the level of liquidity risk that a bank is willing to assume and reflect its financial condition and funding capacity. The tolerance should ensure that the bank manages its liquidity in normal times in such a way that it is able to withstand a prolonged period of, both institution specific and market wide, stress events.

47. The articulation of risk tolerance shall be explicit, comprehensive, and appropriate as per bank’s complexity, business mix, liquidity risk profile and systemic significance; and also, be subjected to sensitivity analysis. The risk tolerance could be specified by way of fixing the tolerance levels for various maturities under flow approach depending upon a bank’s asset - liability profile, extent of stable deposit base, the nature of cash flows, regulatory prescriptions, etc. In respect of mismatches in cash flows in the near-term buckets up to 30 days, a bank shall endeavour to keep the cash flow mismatches at the minimum levels. Risk tolerance may also be specified for various ratios under stock approach.

48. Liquidity risk tolerance may also be expressed in terms of minimum survival horizons under a range of severe but plausible stress scenarios, chosen to reflect the particular vulnerabilities of the bank. The Board shall periodically review the key assumptions.

K. Management Information System (MIS)

49. A bank shall maintain a reliable MIS designed to provide timely and forward-looking information on the liquidity position of the bank and the group to the Board and ALCO, both under normal and stress situations. The MIS shall cover liquidity positions in all currencies in which a bank conducts its business – both on a branch basis (in all countries in which the bank is active) and on an aggregate group basis. It shall capture all sources of liquidity risk, including contingent risks and those arising from new activities, and have the ability to furnish more granular and time sensitive information during stress events.

50. Liquidity risk reports shall provide sufficient detail to enable management to assess the sensitivity of a bank to changes in market conditions, its own financial performance, and other important risk factors. The reports shall inter alia include:

• (1) cash flow projections and cash flow gaps,

• (2) asset and funding concentrations,

• (3) critical assumptions used in cash flow projections,

• (4) funding availability,

• (5) compliance to various regulatory and internal limits on liquidity risk management,

• (6) results of stress tests,

• (7) key early warning or risk indicators,

• (8) status of contingent funding sources and collateral usage.

L. Internal Controls

51. A bank shall maintain appropriate internal controls, systems and procedures to ensure adherence to liquidity risk management policies and procedure as also adequacy of liquidity risk management functioning.

52. Top management (direct reporting to the MD & CEO and/ or the Board) shall ensure that an independent party regularly reviews and evaluates the various components of the bank’s liquidity risk management process. These reviews shall assess the extent to which the bank’s liquidity risk management complies with the regulatory/ supervisory instructions as well as its own policy. The independent review process shall report key issues requiring immediate attention, including instances of non-compliance to various guidance/ limits for prompt corrective action consistent with the Board approved policy.

M. Monitoring of Liquidity

53. A bank shall adhere to the following regulatory limits prescribed to reduce the concentration risk on the liability side of its balance sheet.

• (1) Inter-bank Liability (IBL) Limit

• IBL of a bank shall not exceed 200 per cent of its Net Worth as on 31st March of the previous year. A bank may, with the approval of its Board, fix a lower limit for its IBL, keeping in view its business requirements.

• A bank whose Capital to Risk-weighted Assets Ratio (CRAR) is at least 25 per cent more than the minimum CRAR (15 per cent), i.e. 18.75 per cent as on March 31, of the previous year, is permitted to maintain a higher IBL up to 300 per cent of its Net Worth.

• The limit prescribed above shall include only fund-based IBL within India, including inter-bank liabilities in foreign currency to a bank operating within India. The IBL outside India shall be excluded.

• The IBL limits shall not include collateralized borrowings under Tri-Party Repo (TREPS).

• (2) Call Money Borrowing and Lending Limit

• A bank shall be guided by Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021 for limit on call money  borrowings and lending. The call money borrowing limit shall operate as a sub-limit within the above IBL limit.

N. Off-balance Sheet Exposures and Contingent Liabilities

54. A bank shall estimate and monitor the cash flows arising from off- balance sheet exposures (contingent liabilities) such as those related to special purpose vehicles (SPV), financial derivatives, and guarantees and commitments, under normal situation and the scope for increase in cash flows during periods of stress.

55. In case of securitization transactions, an originating bank shall monitor, at the inception and throughout the life of the transaction, potential risks arising from the extension of liquidity facilities to securitisation programmes. A bank shall establish processes for measuring contingent funding risks, which shall take into account the nature and size of its potential non-contractual obligations, that may expose it to such contingent funding risks, particularly in times of stress where support may be required for related off-balance sheet vehicles. A bank shall give specific attention to securitisation programmes where it considers such support critical for maintaining ongoing access to funding. Similarly, reputational concerns may prompt a bank to purchase assets from money market or other investment funds that it manages or is otherwise affiliated with in times of stress.

O. Collateral Position Management

56. A bank shall have sufficient collateral to meet expected and unexpected borrowing needs and potential increases in margin requirements over different timeframes, depending upon its funding profile. A bank shall also consider the potential for operational and liquidity disruptions that may necessitate the pledging or delivery of additional intraday collateral.

57. A bank shall have proper systems and procedure to calculate all of its collateral positions in a timely manner, including the value of assets currently pledged relative to the amount of security required and availability of unencumbered assets that may be pledged. A bank shall monitor these positions on an ongoing basis. It should also be aware of the operational and timing requirements associated with accessing the collateral given its physical location.

P. Incorporation of Liquidity Costs, Benefits and Risks in the Internal Pricing

58. A bank may implement a scientifically designed internal transfer pricing mechanism that assigns value to funds provided and funds used, based on prevailing market rates. Such a mechanism is a critical component for the effective implementation of the Liquidity Risk Management System. Accordingly, the liquidity costs and benefits shall be an integral part of bank’s strategy planning.

59. A bank may develop a process to quantify liquidity costs and benefits so that these are incorporated in the internal product pricing, performance measurement and new product approval process for all material business lines, products and activities. Such process may aim to align the risk-taking incentives and the liquidity risk exposure of each business line, in accordance with the Board approved risk tolerance of individual business lines.

Q. Funding Strategy - Diversified Funding

60. A bank shall establish a funding strategy that provides effective diversification in the sources and tenor of funding. It may maintain an ongoing presence in its chosen funding markets and strong relationships with fund providers to promote effective diversification of funding sources. A bank may regularly assess its ability to raise funds quickly from each source. It shall identify the main factors that affects its ability to raise funds and monitor those factors closely to ensure that estimates of fund-raising capacity remain valid. These factors shall also be incorporated in bank’s stress test scenario and contingent funding plan.

61. A bank shall avoid over-reliance on a single source of funding. Funding strategy shall also take into account the qualitative dimension of the concentrated behaviour of deposit withdrawal in typical market conditions and overdependence on non-deposit funding sources arising out of unique business model. Funding diversification may be implemented by way of placing limits based on parameters such as tenor, counterparty, secured versus unsecured market funding, instrument type, currency, geography and securitization.

R. Liquidity risk due to Intra Group transfers

62. In order to mitigate the potentially high risk arising from Intra-Group transactions and exposures, the entities shall ensure following:

• (1) The head of the Group financial conglomerate shall develop and maintain liquidity management processes and funding programmes that are consistent with the complexity, risk profile, and scope of operations of the financial conglomerate.

• (2) The liquidity risk management processes and funding programmes shall take into account lending, investment, and other activities, and ensure that adequate liquidity is maintained at the head and each constituent entity within the financial conglomerate. Processes and programmes shall fully incorporate real and potential constraints, including legal and regulatory restrictions, on the transfer of funds among these entities and between these entities and the head.

• (3) A bank shall manage liquidity risks through i) effective governance and management oversight as appropriate; ii) adequate policies, procedures, and limits on risk taking; and iii) strong management information systems for measuring, monitoring, reporting, and controlling liquidity risks.

S. Stress Testing

63. A bank shall integrate stress testing into its overall liquidity risk governance and management framework. A stress test is commonly described as an evaluation of the financial position of a bank under a severe but plausible scenario to assist in decision making within the bank. Stress testing shall serve as forward looking risk assessment tool to alert a bank’s management to adverse unexpected outcomes and facilitate better planning to address the vulnerabilities identified. A bank shall put in place a stress testing framework as detailed in the Reserve Bank of India (Payments Banks- Prudential Norms on Capital Adequacy) Directions, 2025 and as specified below:

64. Scenarios and Assumptions

• (1) A bank shall conduct stress tests on a regular basis for a variety of short term and protracted bank specific and market wide stress scenarios (individually and in combination). In designing liquidity stress scenarios, the nature of bank’s business, activities and vulnerabilities shall be taken into consideration so that the scenarios incorporate the major funding and market liquidity risks to which it is exposed. These include risks associated with its business activities, products (including complex financial instruments and off-balance sheet items) and funding sources. The defined scenarios shall allow a bank to evaluate the potential adverse impact these factors can have on its liquidity position. While historical events may serve as a guide, a bank shall exercise judgment in designing the stress tests. 

• (2) A bank shall specifically take into account the link between reductions in market liquidity and constraints on funding liquidity, especially one with significant market share in, or heavy reliance upon, specific funding markets. It shall also consider the insights and results of stress tests performed for various other risk types while stress testing its liquidity position and consider possible interactions with these other types of risk.

• (3) A bank shall recognise that stress events may simultaneously give rise to immediate liquidity needs in different currencies and multiple payment and settlement systems. It shall consider in the stress tests, the likely behavioural response of other market participants to events of market stress and the extent to which a common response might amplify market movements and exacerbate market strain as also the likely impact of its own behaviour or that of other market participants. The stress tests shall consider how the behaviour of counterparties (or their correspondents and custodians) would affect the timing of cash flows, including on an intra-day basis.

• (4) Based on the type and severity of the scenario, a bank shall consider the appropriateness of a number of assumptions which are relevant to its business. Bank’s choice of scenarios and related assumptions should be well thought of, documented and reviewed together with the stress test results. A bank shall take a conservative approach when setting stress testing assumptions.

• (5) A bank shall conduct stress tests to assess the level of liquidity it should hold, the extent and frequency of which shall be commensurate with the size of the bank and its specific business activities/ liquidity for a period over which it is expected to survive a crisis.

• (6) A bank may conduct stress tests with various survival horizons such as one month or less two or three month, and six months or more.

65. Use of Stress Test Results

• (1) A bank shall use the outcomes of liquidity stress tests to identify and quantify sources of potential liquidity strain and to analyse possible impacts on its cash flows, liquidity position, profitability and solvency. The results of stress tests shall be discussed thoroughly by ALCO. Remedial or mitigating actions shall be identified and taken to limit bank’s exposures, to build up a liquidity cushion and to adjust the liquidity profile to fit the risk tolerance. The results should also play a key role in shaping the bank’s contingent funding planning and in determining the strategy and tactics to deal with events of liquidity stress.

• (2) A bank shall maintain proper documentation of the stress test results and the corresponding action taken. If the stress test results indicate any vulnerability, these shall be reported to the Board and a plan of action charted out immediately. In such cases, the Department of Supervision (DoS), RBI shall be informed immediately.

T. Contingency Funding Plan (CFP)

66. A bank shall formulate a CFP for responding to severe disruptions which might affect its ability to fund some or all of its activities in a timely manner and at a reasonable cost. CFP should prepare a bank to manage a range of scenarios of severe liquidity stress that include both bank specific and market-wide stress and should be commensurate with bank’s complexity, risk profile, scope of operations.

67. CFPs shall contain:

• (1) details of available/ potential contingency funding sources and the amount/ estimated amount which can be drawn from these sources,

• (2) clear escalation/ prioritisation procedures detailing when and how each of the actions can and shall be activated, and

• (3) the lead time needed to tap additional funds from each of the contingency sources. 

68. With a view to diversify, a bank may enter into contingency funding agreements with different banks/ types of banks (public sector, private sector, foreign bank) for providing contingency funding lines and/ or reciprocal lines of credit (e.g., agreement to receive contingent funds in India with a reciprocity agreement to provide funds at a cross border location or vice versa). The CFP shall be flexible to allow rapid response across various stress scenarios. The design, plans and procedures shall be closely integrated with bank’s ongoing analysis of liquidity risk and with the results of the scenarios and assumptions used in stress tests. The plan shall address liquidity requirements over a range of different time horizons including intraday.

69. CFP shall set out a clear decision-making process on what actions to take at what time, who can take them, and what issues need to be escalated to Top Management of a bank. There shall be explicit procedures for effective internal coordination and communication across bank’s different business lines and locations. It shall also address when and how to contact external parties, such as supervisors, central bank, or payments system operators. It is particularly important that in developing and analysing CFP and stress scenarios, a bank is aware of the operational procedures needed to transfer liquidity and collateral across different entities, business lines and jurisdictions and the restrictions that govern such transfers like legal, regulatory and time zone constraints. CFP shall contain clear policies and procedures that will enable a bank’s management to make timely and well-informed decisions, execute contingency measures swiftly and proficiently, and communicate effectively to implement the plan efficiently, including:

• (1) clear specification of roles and responsibilities, including the authority to invoke the CFP. The establishment of a crisis team can facilitate internal coordination and decision-making during a liquidity crisis.

• (2) names and contact details of members of the team responsible for implementing the CFP and the locations of team members.

• (3) the designation of alternates for key roles.

70. CFPs must be tested regularly to ensure their effectiveness and operational feasibility and shall be reviewed by the Board at least on an annual basis.

U. Overseas Operations of the Indian Banks’ Branches

71. General Guidelines

(1) A bank’s liquidity policy and procedures shall include detailed guidelines for its overseas branches to manage their operational liquidity on an ongoing basis.

(2) Management of operational liquidity or liquidity in the short-term is expected to be delegated to local management as part of local treasury function. For measuring and managing net funding requirements, a SLS in respect of overseas operations shall be prepared country-wise on a daily basis, as per format provided in Annex-II Part B and reported to the Reserve Bank on monthly basis. For slotting the various items of assets and liabilities in SLS, bank shall refer to the guidance provided in Annex IV. A bank shall also report figures in respect of joint ventures in the same format on a stand-alone basis. The tolerance limit prescribed for net cumulative negative mismatches in case of domestic SLS i.e., 5 per cent, 10 per cent, 15 per cent, 20 per cent of the cumulative cash outflows in respect of next day, 2-7 days, 8-14 days and 15-30 days bucket shall also be applicable for overseas operations (country-wise).

(3) The broad norms in respect of overseas liquidity management are as follow:

i. A bank shall not normally assume voluntary risk exposures extending beyond a period of ten years.

ii. A bank shall endeavour to broaden its base of long- term resources and funding capabilities consistent with its long-term assets and commitments.

iii. The limits on maturity mismatches shall be established within the following tolerance levels:

• a. long term resources shall not fall below 70 per cent of long-term assets; and

• b. long- and medium-term resources together shall not fall below 80 per cent of the long- and medium-term assets.

(4) These controls shall be undertaken currency-wise, and in respect of all such currencies which individually constitute 10 per cent or more of a bank’s consolidated overseas balance sheet. Netting of inter-currency positions and maturity gaps shall not be permitted. For the purpose of these limits, short term, medium term and long term are defined as under:

• a. ‘Short-term’ refers to those maturing within 6 months.

• b. ‘Medium-term’ refers to those maturing in 6 months and longer but within 3 years.

• c. ‘Long-term’ refers to those maturing in 3 years and longer.

i. The monitoring system shall be centralised in the International Division (ID) of a bank for controlling the mismatch in asset-liability structure of the overseas sector on a consolidated basis, currency-wise. The ID of a bank shall review the structural maturity mismatch position at quarterly intervals and submit the review/s to the Top Management of the bank.

(5) In countries, where the mismatches in the maturity structures are subject to regulatory or supervisory guidelines, those shall be controlled locally within the host country regulatory or prudential parameters. Additionally, at the corporate level (i.e., in respect of the overseas operation as a whole), the maturity mismatches shall also be controlled by bank’s management by establishing tolerance limits on the global asset-liability structures and monitored in the aggregate. A bank shall undertake/ exercise relevant control on a centralised basis.

72. Maintenance of Liquidity – Centralisation Vs Decentralisation

• (1) A bank shall adopt a decentralised liquidity management model, with flexibility to establish regional centres or hubs, that may fund/ manage liquidity for some jurisdictions or currencies, keeping in view the constraints on the transfer of liquidity across jurisdictions/ entities.  

• (2) Notwithstanding the decentralised model, a bank with multiple platforms and legal entities shall establish a centralised liquidity management oversight function at the group level. A bank’s group level strategy and policy documents shall describe the structure for monitoring institution-wide liquidity risk and for overseeing foreign branches. The bank’s liquidity risk management plan shall clearly document the assumptions regarding the transferability of funds and collateral.

73. Maintenance of Liquidity – Overseas Branches of Indian banks

• (1) A bank shall maintain adequate liquidity at both the solo and consolidated levels. Irrespective of the organisational structure and degree of centralised or decentralized liquidity risk management, a bank shall actively monitor and control liquidity risks at the level of individual legal entities, foreign branches and the group as a whole, incorporating processes that aggregate data in order to develop a group-wide view of liquidity risk exposures and identify constraints on the transfer of liquidity within the group.

• (2) If the legal entities including joint ventures and associates are subject to a regulatory oversight other than by the Reserve Bank, that regulatory regime will prevail. In case they are not subject to any such regulatory oversight, a bank shall evolve and follow bank like regulatory liquidity standards. On a consolidated basis, the regulatory standards as applicable for the Group shall also be adhered to.

• (3) Indian banks’ branches abroad are required to manage liquidity according to the host or home country requirements, whichever is more stringent. Branches are expected to be self-sufficient with respect to liquidity maintenance and should be able to withstand a range of severe but plausible stress test scenarios on their own within the stress testing framework laid down in paragraphs 63 to 65 of the Directions. However, in case of extreme stress situations, Indian banks’ branches abroad can rely on liquidity support from their Head Office.

Chapter IV- Interest Rate Risk (IRR) Management

A. General Instructions

74. Interest rate risk is the risk where changes in market interest rates affect a bank’s financial position. Interest rate risk from ‘earnings perspective’ is interest rate changes impacting a bank’s earnings (i.e. reported profits) through changes in its Net Interest Income (NII). Interest rate risk from ‘economic value perspective’ is interest rate changes impacting a bank’s Market Value of Equity (MVE) or Net Worth through changes in the economic value of its rate sensitive assets, liabilities and OBS positions. The interest rate risk from ‘earnings perspective’ is measured using the Traditional Gap Approach (TGA) whereas the interest rate risk from ‘economic value perspective’ is measured using Duration Gap Approach (DGA). A bank shall carry out both the analyses.

75. The framework, both DGA and TGA, shall be applied to the global position of assets, liabilities and OBS items of a bank, which are rate sensitive. A bank shall compute its interest rate risk position in each currency applying the DGA and TGA to the Rate Sensitive Assets (RSA)/ Rate Sensitive Liabilities (RSL) items, where either the assets, or liabilities in a currency constitute 5 per cent or more of bank’s global assets or global liabilities. The interest rate risk position in all other residual currencies shall be computed separately on an aggregate basis.

76. The methodologies specified in these Directions shall serve as a benchmark. A bank which has more sophisticated systems may continue its existing systems but shall also adopt the DGA and TGA as supervisory reporting/ disclosure frameworks.

B. Earnings Perspective – TGA

77. The Gap Report shall be generated by grouping rate sensitive liabilities, assets and off-balance sheet positions into time buckets according to residual maturity or next repricing period, whichever is earlier. All investments, advances, deposits, borrowings, purchased funds, etc. that mature/ reprice within a specified timeframe are interest rate sensitive. Similarly, any principal repayment of loan is also rate sensitive if the bank expects to receive it within the time horizon. This includes final principal payment and interim instalments. Assets and liabilities repriced at pre-determined intervals are rate sensitive at the time of repricing.

78. A bank shall use the traditional Gap analysis to measure the level of a bank’s exposure to interest rate risk in terms of sensitivity of its NII to interest rate movements over the horizon of analysis, which is usually one year. A bank shall bucket all RSA and RSL and OBS items as per residual maturity/ re-pricing date in various time buckets as per guidance provided in Annex VI of the Directions and report as per the reporting format of Return on Interest Rate Sensitivity provided in Annex-III of the Directions. A bank shall compute Earnings at Risk (EaR) representing the loss of income under different interest rate scenarios over a time horizon of one year.

C. Economic Value Perspective – DGA

79. The DGA is to measure the level of a bank’s exposure to interest rate risk in terms of sensitivity of Market Value of its Equity (MVE) to interest rate movements, and report as per reporting format of Return on Interest Rate Sensitivity provided in Annex-III of direction.

80. For calculation of changes in MVE due to changes in the interest rates, market values of RSA and RSL shall be used. However, for simplicity, the book values of the RSA and RSL (both inclusive of notional value of rate sensitive OBS items) may be used as an approximation.

81. A bank shall bucket all RSA and RSL, including the rate sensitive OBS asset and liabilities, as per residual maturity/ re-pricing dates in various time buckets as per the guidance provided in Annex VI of the Directions, and compute the Modified Duration Gap (MDG). The MDG shall be used to evaluate the impact on the MVE of the bank under different interest rate scenarios.

82. Under MDG framework a bank shall compute Modified Duration of RSA (MDA) and Modified Duration of RSL (MDL).

Explanation:

MD of an asset or liability measures the approximate percentage change in its value for a 100 basis point change in the rate of interest.

MDA and MDL are the weighted average of the Modified Duration (MD) of items of RSA and RSL respectively.

83. The MDG, reflecting the degree of duration mismatch in the RSA and RSL in a bank’s balance sheet, shall be calculated with the help of the following formula:

A higher absolute value of the MDG shall indicate greater exposure of the bank to interest rate shocks.

84. The impact of changes in the interest rates on the MVE shall be evaluated by computing ΔE with the help of following formula:

wherein:

• (1) Equity shall mean Net Worth as defined in Reserve Bank of India (Payments Banks – Concentration Risk Management) Directions, 2025.

• (2) ‘ΔE’ stands for change in the value of equity.

• (3) ‘Δ i’ stands for change in interest rates in percentage points (1 per cent change to be written as 0.01).

A schematic hypothetical illustration for computation of MDG, and for an interest rate shock of 200 basis points is as below:

85. The estimated drop in MVE resulting from the prescribed interest rate shock shall indicate the economic impact on a bank’s equity, assuming the shock scenario materialises. This decline shall not be construed as an accounting loss as banking book is not marked to market.

86. The MDG framework is based on the utilization of book values of banking book assets and liabilities for the purpose of computation of MD. However, a bank that has the capability to use market value of assets and liabilities of banking book shall do so. The market values of assets and liabilities shall be determined by discounted cash flow method. The step-by-step approach for computing the MDG is as under:

Identify variables such as principal amount, maturity date/ re-pricing date, coupon rate, yield, frequency and basis of interest calculation for each item/ category of RSA/ RSL.

Plot each item/ category of RSA/RSL under the various time buckets. The absolute notional amount of rate sensitive off-balance sheet items in each time bucket shall be included as RSA if positive and as RSL if negative.

The mid-point of each time bucket shall be taken as a proxy for the maturity of assets and liabilities in that time bucket, except for those for which the bank is able to compute modified duration on individual basis.

Determine the coupon for computation of MD of RSAs and RSLs as indicated in Annex VI of the Directions except for those for which the bank is able to compute MD on individual basis.

Determine the yield curve for arriving at the yields based on current market yields or current replacement cost or as specified in Annex VI for each item/ category of asset/ liability/ OBS item.

Calculate the MD in each time band of each item/ category of RSA/ RSL using the maturity date, yield, coupon rate, frequency, yield and basis for interest calculation.

Calculate the MD of each item/ category of RSA/ RSL as weighted average MD of each time bucket for that item.

Calculate the weighted average MD of all RSA (MDA) and RSL (MDL) to arrive at Modified Duration Gap (MDG) and Modified Duration of Equity (MDOE).

87. The requirement to determine the impact of interest rate risk on the Market Value Equity (MVE) shall be applicable across the bank’s entire balance sheet i.e. both the banking and trading books. This requirement shall be is in addition to the existing guidelines for assessing capital adequacy requirement for interest rate sensitive positions in the trading book and banking book (under Pillar II) separately.

88. A bank shall be considered an outlier from a supervisory perspective (under Pillar II) if the economic value of its banking book declines by more than 20 per cent of its MVE due to a standardised interest rate shock of 200 basis points. However, for decline in the MVE due to standardised interest rate shock of 200 basis points on the entire balance sheet, a bank shall not be subjected to outlier criteria.

Explanation: The 200 basis point shock shall be applied to the entire balance sheet including the trading book. A bank shall monitor its interest rate risk positions and take appropriate corrective action with reference to the stipulations in paragraph 97 of the direction for internal limits on volatility of MVE i.e., percentage variation in the MVE, and limits on individual gaps. Any significant difference in the assessment of interest rate risk for the bank under two scenarios -(i) the bank as a whole and (ii) separately for banking and trading book with different shocks - and their implication for regulatory capital would be examined under Supervisory Review and Evaluation Process (SREP).

D. Monitoring of Interest Rate Risk

89. A bank shall prepare the Interest Rate Sensitivity (IRS) Statement, under TGA and DGA, as per reporting format of Return on Interest Rate Sensitivity provided in Annex-III of the Directions, bucketing all RSA and RSL in following time buckets as per table below:

90. The RSA and RSL with fixed maturities shall be classified in the relevant time buckets based on residual maturity/ re-pricing dates.

91. For RSA and RSL items without fixed maturity or with embedded optionality (i.e., savings bank deposits, current account deposits and mortgage loans), a bank shall undertake behavioural studies to assess the interest rate sensitivity realistically. The bank shall have an appropriate process and a detailed framework for conducting such studies and review their output at least annually. A bank shall apply the results of the behavioural studies on a consistent basis and the results shall be reviewed/ revised once a year in the first quarter of the financial year, if necessary. The behavioural studies shall be based on at least three years data. The bank shall evolve a suitable mechanism, supported by empirical studies and behavioural analysis to estimate the future behaviour of assets and liabilities and OBS items with respect to changes in market variables.

92. An indicative framework for bucketing of assets and liabilities has been furnished in Annex VI of the Directions.

93. Calculation of the MD of each individual rate sensitive asset, liability and OBS position and taking their weighted average to derive the MD of RSA and RSL enhance the accuracy of calculation. Accordingly, a bank having the capability to compute the MD of each item of RSA and RSL shall do so to improve the accuracy of measurement of interest rate risk.

94. However, a bank which is not equipped to compute the MD of each individual rate sensitive asset, liability and off-balance sheet position shall:

• (1) group RSA and RSL under the broad categories indicated in Annex VI of the direction under various time buckets; and

• (2) compute Modified Duration (MD) of these categories of assets/ liabilities and off-balance sheet items using the suggested common maturity, coupon and yield parameters indicated in Annex VI of the direction.

The Modified Duration Gap (MDG) computed from this approach shall be simpler, providing a cost effective alternative despite approximations in the calculation of MD.

95. A bank shall compile the ALM statements and compute the MDG for the entire balance sheet, encompassing both the banking and trading books.

E. Treatment of positions in various currencies

96. While reporting the currency-wise interest rate risk position, as advised in paragraph 75 above, in the reporting format of Return on Interest Rate Sensitivity provided in Annex-III of the Directions, a bank shall convert the foreign currencies into INR using the relevant spot closing rates as published by FEDAI. A bank shall compute the MD of each item or group of items of rate sensitive assets, liabilities and OBS items using the appropriate coupon and relevant foreign currency yield curve. For residual currencies, a bank may use the appropriate coupon and yield curve of the largest among the residual currencies. In deciding the appropriate coupon and yield curves, a bank shall follow the principles outlined in Annex VI of the Directions.

F. Interest rate risk management

97. A bank shall, with the approval of its Board/ RMC of the Board, set appropriate internal limits on Earnings at Risk (EaR) and volatility in the MVE, based on its risk bearing and risk management capacity. These limits shall be linked to MVE for DGA and the NII for TGA. The Board/ ALCO shall periodically review the above limits after assessing various scenarios of interest rates and the resultant volatility of earnings in terms of NII and volatility in Net Worth.

98. ALCO prior approval shall be obtained for deciding upon yields, assumptions used/ proposed to be used, bucketing, behavioural studies, etc. for DGA. A bank shall ensure that such decisions are compliant with regulatory prescriptions.

99. A bank shall update material assumptions on a regular basis to reflect the current market and operating environment. The process for developing such material assumptions shall be formalized and reviewed at least annually.

100. In accordance with Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025, if an interest rate shock of 200 basis points results in a drop in the value of equity of more than 20 per cent of MVE, the level of interest rate risk shall be treated as excessive. In such cases, the RBI may require the bank to take corrective action as specified in the above Directions.

101. A bank shall measure its vulnerability to losses in stressed market conditions, including the breakdown of key assumptions, and consider these results when establishing and reviewing its limits and policies in respect of Interest Rate Risk, in accordance with the instructions provided in Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025.

102. A bank shall adopt the practice of periodic model validation. In cases where internal models/ software packages are used, the bank shall ensure the integrity and validation of data/ assumptions being used to generate the results, validation and functioning of the entire system of interest rate risk management by an independent audit either by an experienced internal auditor or external auditor who is conversant with risk management processes. The Audit Committee of the Board (ACB) shall ensure the suitability of auditors through a due diligence process.

103. A bank shall ensure documentation in respect of discount rates, coupons, assumptions used/ proposed to be used, bucketing, behavioural studies and validation process. All material assumptions, regardless of the source, shall be supported with analysis and documentation. The bank shall ensure that sufficient documentation is made available at the time of validation, internal audit, statutory audit and RBI inspection.

Chapter V- Monitoring and Reporting

A. Liquidity Risk

A.1 Preparation and Review of Statements

104. A bank shall prepare domestic structural liquidity statement (SLS)- INR on a daily basis.

105. A bank shall report the liquidity return comprising the SLS in five parts viz.

• (1) Domestic currency for Indian operations

• (2) Foreign currency for Indian operations

• (3) Combined Indian operations

• (4) Overseas operations

• (5) Consolidated bank operations

The formats of the returns are provided in Annex-II of the Directions.

A.2 Regulatory Reporting and Periodicity of Returns

Liquidity Return

106. A bank shall adhere to the periodicity of submission in respect of each part of the Liquidity Return is specified in the table below. Further, bank shall refer Reserve Bank of India (Filing of Supervisory Returns) Directions, 2024 dated February 27, 2024 for submission timelines for all regulatory returns.

B. Interest Rate Risk

B.1 Preparation and Review of Statements

107. A bank shall prepare the Interest Rate Sensitivity (IRS) Statement, under TGA and DGA, as per reporting format of Return on Interest Rate Sensitivity provided in Annex-III of the Directions.

B.2 Regulatory Reporting and Periodicity of Returns

108. A bank shall submit Interest rate sensitivity Statement under TGA and DGA approaches on a monthly basis. Further, bank shall refer Reserve Bank of India (Filing of Supervisory Returns) Directions, 2024 for submission timelines for all regulatory returns.

Chapter VI- Repeal and Other Provisions

A. Repeal and Saving

109. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to Asset Liability Management as applicable to Payments Banks stands repealed, as communicated vide notification dated XX, 2025. The Directions, instructions and guidelines already repealed shall continue to remain repealed.

110. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions.

B. Application of other laws not barred

111. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations, or directions, for the time being in force.

C. Interpretations

112. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the RBI may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the RBI shall be final and binding.