The Reserve Bank of India (RBI) issued the “Small Finance Banks – Prudential Norms on Capital Adequacy Directions, 2025” under Section 35A of the Banking Regulation Act, 1949, aiming to strengthen the capital framework for Small Finance Banks (SFBs) in the interest of financial stability and public confidence. The Directions, effective immediately from November 28, 2025, prescribe prudential norms related to capital adequacy for all SFBs, ensuring they maintain sufficient capital buffers to absorb potential losses and support sustainable operations. While the Directions provide a framework for assessing capital adequacy, they clarify that the mere mention of activities, transactions, or items does not imply automatic permissibility; SFBs must comply with all existing statutory and regulatory requirements before engaging in any banking activity. These norms are designed to enhance risk management, promote operational resilience, and ensure that SFBs remain adequately capitalized to meet regulatory expectations and public interest objectives.
RESERVE BANK OF INDIA
RBI/DOR/2025-26/182
DOR.CAP.REC.101/21-01-002/2025-26 | Dated: November 28, 2025
Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025
In exercise of the powers conferred under Section 35A of the Banking Regulation Act, 1949, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, 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 (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025.
2. These Directions shall come into effect immediately upon issuance.
B Applicability
3. These Directions shall be applicable to Small Finance Banks (hereinafter collectively referred to as ‘banks’ or ‘SFBs’ and individually as a ‘bank’ or ‘SFB’).
Note: Mere mention of an activity, transaction or item in these Directions does not imply that it is permitted bank shall refer to all applicable extant statutory and regulatory Directions and requirements while determining the permissibility or otherwise of an activity, transaction or item.
Read Full text of the Notification: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/182MD.pdf
