The Reserve Bank of India has issued Draft Amendment Directions on April 8, 2026, proposing revisions to guidelines governing the inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for computation of Capital to Risk Weighted Assets Ratio (CRAR) for banks. These amendments apply to commercial banks, small finance banks, and payments banks, and have been released for public consultation until April 29, 2026. The key proposal removes the earlier condition that restricted inclusion of quarterly profits based on deviations in incremental non-performing asset (NPA) provisions.
Instead, banks may now include current-year profits in CET1 capital on a quarterly basis, subject to certain safeguards. These include mandatory auditing or limited review of financial statements and a standardized formula for calculating eligible profits, which deducts a portion linked to historical dividend payouts. Additionally, any cumulative net losses must be fully deducted while computing CET1 capital. The amendments are issued under Section 35A of the Banking Regulation Act, 1949, reflecting the RBI’s objective to streamline capital adequacy norms while maintaining prudential safeguards. Overall, the draft seeks to simplify regulatory conditions, enhance transparency, and provide greater flexibility in capital computation, while ensuring that only appropriately adjusted and verified profits contribute to regulatory capital calculations.
Reserve Bank of India
Date : Apr 08, 2026
RBI invites public comments on Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’
The Reserve Bank of India (RBI) has released today the following Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’:
ii. Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
The comments on the said Draft Amendment Directions are invited from the stakeholders till April 29, 2026. The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on the Reserve Bank’s website or may alternatively be forwarded to:
The Chief General Manager
Balance Sheet Group
Department of Regulation, Central Office
Reserve Bank of India, 13th Floor
Shahid Bhagat Singh Marg
Fort
Mumbai – 400 001
Or
by email
with the subject line Feedback on Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’.
Background and Objective
Currently, Commercial Banks (excluding Regional Rural Banks and Local Area Banks) may reckon the profits in current financial year for CRAR calculation on a quarterly basis provided the incremental provisions made for non-performing assets (NPAs) at the end of the any of the four quarters of the previous financial year have not deviated more than 25 per cent from the average of the four quarters. Based on a review, it has been decided to do away with this qualifying condition of incremental provisions for NPAs. Accordingly, RBI has proposed revisions in the matter. As announced in the Statement on Developmental and Regulatory Policies dated April 08, 2026, the draft Directions in this regard are being issued for public consultation.
(Brij Raj)
Chief General Manager
Press Release: 2026-2027/45
Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026 – Draft
Draft for Comments
RBI/2026-27/
DOR.CAP.REC.No. /21.01.002/2026-27
April 08, 2026
The Reserve Bank had issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. Based on a review, it is proposed to amend the provision relating to inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital by a Commercial Bank.
2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India 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. These instructions shall be called the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
4. These Directions shall come into force with immediate effect.
5. These Amendment Directions modify the Master Direction as under:
Paragraph 12 (x) shall be replaced by:
“(x) A bank may reckon the profits in current financial year for CRAR calculation on a quarterly basis subject to the following conditions:
(a) The financial statements shall be audited or subjected to limited review on a quarterly basis.
(b) The amount which can be reckoned shall be arrived at by using the following formula:
EPt = NPt – 0.25 *D*t
Where:
EPt = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NPt = Net profit up to quarter ‘t’
D = average dividend paid during the last three financial years
The cumulative net loss up to the quarter end shall be fully deducted while calculating CET1 capital for the relevant quarter.”
Yours faithfully,
(Sunil T S Nair)
Chief General Manager
Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026 – Draft
RBI/2026-27/
DOR.CAP.REC.No. /21.01.002/2026-27
April 08, 2026
The Reserve Bank had issued the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. Based on a review, it is proposed to amend the provision relating to inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital by a Small Finance Bank.
2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India 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. These instructions shall be called the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
4. These Directions shall come into force with immediate effect.
5. These Amendment Directions modify the Master Direction as under:
Paragraph 11 (x) shall be replaced by:
“(x) A bank may reckon the profits in current financial year for CRAR calculation on a quarterly basis subject to the following conditions:
(a) The financial statements shall be audited or subjected to limited review on a quarterly basis.
(b) The amount which can be reckoned shall be arrived at by using the following formula:
EPt = NPt – 0.25 *D*t
Where:
EPt = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NPt = Net profit up to quarter ‘t’
D = average dividend paid during the last three financial years
The cumulative net loss up to the quarter end shall be fully deducted while calculating CET1 capital for the relevant quarter.”
Yours faithfully,
(Sunil T S Nair)
Chief General Manager
Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 – Draft
RBI/2026-27/
DOR.CAP.REC.No. /21.01.002/2026-27
April 08, 2026
The Reserve Bank had issued the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. Based on a review, it is proposed to amend the provision relating to inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital by a Payments Bank.
2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India 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. These instructions shall be called the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026.
4. These Directions shall come into force with immediate effect.
5. These Amendment Directions modify the Master Direction as under:
Paragraph 9 (x) shall be replaced by:
“(x) A bank may reckon the profits in current financial year for CRAR calculation on a quarterly basis subject to the following conditions:
(a) The financial statements shall be audited or subjected to limited review on a quarterly basis.
(b) The amount which can be reckoned shall be arrived at by using the following formula:
EPt = NPt – 0.25 *D*t
Where:
EPt = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NPt = Net profit up to quarter ‘t’
D = average dividend paid during the last three financial years
The cumulative net loss up to the quarter end shall be fully deducted while calculating CET1 capital for the relevant quarter.”
Yours faithfully,
(Sunil T S Nair)
Chief General Manager
