The Reserve Bank of India (RBI) on August 05, 2024, issued a draft circular on “Regulatory Principles for Management of Model Risks in Credit”.
The following has been stated namely: -
• To address potential risks from the use of various models as part of Regulated Entities’ (REs) credit management, including for credit appraisal, borrower scoring, pricing, risk management, etc. and to ensure robustness in the process of model deployment by REs for credit decisions, the Reserve Bank of India has released the draft circular on ‘Regulatory Principles for Management of Model Risks in Credit’.
• This shall come into force within three months from the date of issuance, and New credit models to be adopted by REs shall follow these guidelines with effect from the above date and the existing models shall be validated in terms of these guidelines within six months from the date of issuance of this circular.
• The Comments on the draft circular are invited from the public/stakeholders by September 4, 2024, and shall be addressed to “ The Chief General Manager Credit Risk Group Department of Regulation, Central Office Reserve Bank of India, 12/13th Floor, Shahid Bhagat Singh Marg, Fort Mumbai – 400 001” or email at: [email protected].
[Notification no. - RBI/2024-25/DOR.STR.REC. /21.04.048/2024-25]
