RBI (Small Finance Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026

The Reserve Bank of India issued the Small Finance Banks – Prudential Norms on Capital Adequacy (Amendment) Directions, 2026 with immediate effect, amending the 2025 Directions under Section 35A of the Banking Regulation Act, 1949. The amendment revises risk-weighting norms for Small Finance Banks’ claims on non-resident corporates by prescribing detailed mappings linked to ratings from international credit rating agencies. For claims rated by S&P, Fitch, or Moody’s, risk weights range from 20% for the highest ratings to 150% for low-rated exposures, while unrated claims generally attract 100%, subject to stricter thresholds. For claims originating at International Financial Services Centres (IFSCs) and rated by CareEdge Global IFSC Limited, a separate, granular mapping is introduced. The Directions also impose a 150% risk weight on large unrated exposures or those that become unrated after prior ratings, and prohibit preferential treatment over the sovereign’s risk weight. Additionally, the RBI formally recognizes CareEdge Global IFSC Limited—alongside Fitch, Moody’s, and S&P—for capital adequacy risk-weighting purposes.

RESERVE BANK OF INDIA

RBI/2025-26/190
DOR.STR.REC.391/21-01-002/2025-26 | Dated: January 09, 2026

Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026

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, and in exercise of the powers conferred by the section 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:

(1) Para 39 shall be substituted by the following:

“39. The claims on non-resident corporates shall be risk weighted as under as per the ratings assigned by international rating agencies. Further, with regard to claims on all non-resident corporates originating at International Financial Services Centre (IFSC) for which ratings are assigned by M/s CareEdge Global IFSC Limited, the mapping shall be as per Table 8.2 below.

Table 8.1: Claims on non-resident corporates – risk weight mapping for the ratings assigned by S&P/Fitch/Moody’s Ratings

Table 8.2: Claims on non-resident corporates – risk weights mapping for the ratings assigned by M/s CareEdge Global IFSC Limited for claims originating at International Financial Services Centre (IFSC)

Explanation –

(i) Unrated claims having aggregate exposure from banking system of more than ₹200 crore shall attract a risk weight of 150 per cent.

(ii) Claims with aggregate exposure from banking system of more than ₹100 crore which were rated earlier and subsequently have become unrated shall attract a risk weight of 150 per cent.

(iii) No claim on an unrated corporate shall be given a risk weight preferential to that assigned to its sovereign of incorporation.”

(2) Para 118 shall be substituted by the following:

“118. A bank may also use the ratings of the following international credit rating agencies (arranged in alphabetical order) for the purposes of risk weighting its claims for capital adequacy purposes where specified:

(i) CareEdge Global IFSC Limited (for all non-resident corporate exposures originating in IFSC);

(ii) Fitch;

(iii) Moody’s; and

(iv) Standard & Poor’s.”

4. The above amendment shall come into force with immediate effect.

(Vaibhav Chaturvedi)
Chief General Manager