The Reserve Bank of India (RBI) has issued the Small Finance Banks – Prudential Norms on Capital Adequacy (Amendment) Directions, 2025, following a review after the issuance of the Concentration Risk Management Amendment Directions, 2025. Exercising powers under Sections 21 and 35A of the Banking Regulation Act, 1949, RBI has deemed it necessary and expedient in the public interest to amend the existing Directions. The key modification in the Amendment Directions is the deletion of Paragraph 68 under Chapter IV – Calculation of Risk Weighted Assets (RWAs). This change affects the methodology or provisions related to the computation of RWAs for small finance banks. The amendment will come into effect from January 1, 2026. The Directions aim to update prudential norms for capital adequacy in line with regulatory requirements, ensuring that small finance banks maintain appropriate capital buffers while managing concentration risks.
RESERVE BANK OF INDIA
RBI/2025-26/131
DOR.CRE.REC.339/21-01-002/2025-26 | Dated: December 4, 2025
Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2025
Please refer to Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review consequent to the issuance of Reserve Bank of India (Small Finance Banks – Concentration Risk Management) Amendment Directions, 2025, and in exercise of the powers conferred by the sections 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. The Amendment Directions modifies the Directions as under:
Paragraph 68 contained under ‘Chapter IV – Calculation of risk weighted assets (RWAs)’ shall stand deleted.
4. The above amendment shall come into force from January 1, 2026.
(Vaibhav Chaturvedi)
Chief General Manager
