RBI Seeks Feedback on Draft Directions Clarifying Owned Fund/Tier 1 Capital for NBFCs/ARCs and Concentration Norms

Reserve Bank of India on January 13, 2026, invited public comments on draft amendment directions proposing clarifications on the computation of Owned Fund and Tier 1 Capital for NBFCs, Housing Finance Companies, Core Investment Companies, Mortgage Guarantee Companies, Asset Reconstruction Companies and Standalone Primary Dealers. The draft amendments also revise how Tier 1 Capital is to be reckoned for compliance with credit and investment concentration norms. A key proposal across the directions is the inclusion of quarterly profits in Owned Fund or Tier 1 Capital, subject to conditions such as limited review of quarterly financials by statutory auditors, adjustment for average dividends paid over the last three years, and full deduction of current-year losses. The drafts also clarify that applicable capital for concentration norms should be based on the latest available audited or limited-reviewed financial statements. Certain entities are exempted from deducting Right-of-Use assets where the underlying leased asset is tangible. Stakeholders may submit feedback by January 28, 2026, through RBI’s “Connect 2 Regulate” platform or directly to the Department of Regulation.

Reserve Bank of India

India’s Central Bank

Date : Jan 13, 2026

RBI invites public comments on Draft Amendment Directions on ‘Clarification on Owned Fund / Tier 1 Capital computation for NBFCs / ARCs and applicability to “Credit / Investment Concentration” Norms’

The Reserve Bank of India (RBI) has released today the Draft Amendment Directions on ‘Clarification on Owned Fund / Tier 1 Capital computation for NBFCs / ARCs and applicability to “Credit / Investment Concentration” Norms’ which amend the Master Directions listed below:

i. Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Directions, 2025 vide Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026.

ii. Master Direction – Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Directions, 2025 vide Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Second Amendment Directions, 2026.

iii. Reserve Bank of India (Housing Finance Companies) Directions, 2025 vide Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026.

iv. Reserve Bank of India (Core Investment Companies) Directions, 2025 vide Reserve Bank of India (Core Investment Companies) Amendment Directions, 2026.

v. Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025 vide Reserve Bank of India (Mortgage Guarantee Companies) Amendment Directions, 2026.

vi. Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025 vide Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026.

vii. Reserve Bank of India (Standalone Primary Dealers) Directions, 2025 vide Reserve Bank of India (Standalone Primary Dealers) Amendment Directions, 2026.

The comments on the said Draft Amendment Directions are invited from the stakeholders till January 28, 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 ‘Clarification on Owned Fund / Tier 1 Capital computation for NBFCs / ARCs” and applicability to “Credit/Investment Concentration” Norms’.

Background and Objective

Currently, NBFCs (other than NBFC-UL) and ARCs reckon Tier 1 Capital as on March 31 of the previous year for complying with Credit / Investment concentration norms. RBI has been receiving requests from NBFCs for a review of these provisions as well as for clarification on certain aspects of Owned Fund / Tier 1 Capital. Accordingly, RBI has reviewed the relevant provisions / Directions / guidelines and has proposed clarifications and revisions in the matter.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/1911

*******

Reserve Bank of India

India’s Central Bank

Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 – Draft

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26 | Dated: January 13, 2026

All Non-Banking Financial Companies (NBFCs)

Dear Sir / Madam,

Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 – Draft for Comments

The Reserve Bank had issued the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components reckoned in the computation of Owned Fund.

2. Accordingly, in exercise of the powers conferred under Sections 45L of the Reserve Bank of India Act, 1934 and Section 3 read with Section 31A and Section 6 of the Factoring Regulation Act, 2011, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the following Amendment Directions.

3. These Directions shall be called Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026.

4. These Amendment Directions shall come into force from immediate effect.

5. These Amendment Directions modify the Master Direction as under:

Paragraph 9 (iii) shall be replaced by:

“(iii) free reserves, including quarterly profits,

Inclusion of quarterly profits shall be subject to the following conditions:

a. The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.

b. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:

EP_t = NP_t – 0.25 *D*t
Where:
EP_t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP_t = Net profit up to quarter ‘t’
D = average dividend paid during the last three years

Losses in the current year shall be fully deducted from Owned Fund.”

Yours faithfully,

Sunil T S Nair
Chief General Manager

**********

Reserve Bank of India

India’s Central Bank

Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Second Amendment Directions, 2026 – Draft

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26 | Dated: January 13, 2026

All Non-Banking Financial Companies (NBFCs)

Dear Sir / Madam,

Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Second Amendment Directions, 2026 – Draft for Comments

The Reserve Bank had issued the Master Direction – Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Directions, 2025 (hereinafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. There is a need to further amend the same to review the definition of Tier 1 capital being reckoned for complying with extant credit / investment concentration norms for NBFCs.

2. Accordingly, in exercise of the powers conferred by Chapter III B of the Reserve Bank of India Act, 1934, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the following Amendment Directions.

3. Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Second Amendment Directions, 2026.

4. These Amendment Directions shall come into force from immediate effect.

5. These Amendment Directions modify the Master Direction as under:

(1) The following paragraphs shall be inserted after paragraph 14(2):

“14(3) The applicable Tier 1 Capital for compliance with the norms stated in paragraphs 13 and 14 above, shall be determined based on the NBFC’s latest available financial statements (audited or subject to limited review).

14(4) The term “Tier 1 Capital” in this context shall be as defined in paragraph 10 of the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Directions, 2025.”

Yours faithfully,

Sunil T S Nair
Chief General Manager

**********

Reserve Bank of India

India’s Central Bank

Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026 – Draft

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26 | Dated: January 13, 2026

All Housing Finance Companies (HFCs)

Dear Sir / Madam,

Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026 – Draft for Comments

The Reserve Bank had issued the Reserve Bank of India (Housing Finance Companies) Directions, 2025 (hereafter referred as the ‘Master Directions’), on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components reckoned in the computation of Owned Fund.

2. Accordingly, in exercise of the powers conferred under sections 45L and 45MA of the Reserve Bank of India Act, 1934 and Sections 30, 30A, 32 and 33 of the National Housing Bank Act, 1987, and of all powers enabling it in this behalf, the Reserve Bank having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country so to do, and to prevent the affairs of any Housing Finance Company (HFC) from being conducted in a manner detrimental to the interest of investors and depositors or in any manner prejudicial to the interest of such HFC, hereby, issues to every HFC the following Amendment Directions.

3. These Directions shall be called the Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026.

4. These Amendment Directions shall come into force with immediate effect.

5. These Amendment Directions modify the Master Direction mentioned as under:

Paragraph 10(16) shall be replaced by:

“10(16) “Owned Fund” means paid up equity capital, preference shares which are compulsorily convertible into equity, free reserves including quarterly profits, balance in share premium account, and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, as reduced by accumulated loss balance, book value of intangible assets and deferred revenue expenditure, if any.

Inclusion of quarterly profits shall be subject to the following conditions:

a. The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.

b. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:

EP_t = NP_t – 0.25 *D*t
Where:
EP_t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP_t = Net profit up to quarter ‘t’
D = average dividend paid during the last three years

Losses in the current year shall be fully deducted from Owned Fund.

The HFC shall not be required to deduct a Right-of-Use (ROU) asset (created in terms of Ind AS 116-Leases) from Owned Fund, provided the underlying asset being taken on lease is a tangible asset.”

Yours faithfully,

Sunil T S Nair
Chief General Manager

**********

Reserve Bank of India (Core Investment Companies) Amendment Directions, 2026 – Draft for Comments

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26

January 13, 2026

All Core Investment Companies (CICs)

Dear Sir / Madam,

The Reserve Bank had issued the Reserve Bank of India (Core Investment Companies) Directions, 2025 (hereafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components reckoned in the computation of Owned Fund.

2. Accordingly, in exercise of the powers conferred by sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934 (2 of 1934), and of all the powers enabling it in this behalf, the Reserve Bank having considered that it is necessary and expedient in the public interest and being satisfied that for the purpose of enabling it to regulate the credit system to the advantage of the country so to do, hereby, issues the following Amendment Directions.

3. These Directions shall be called the Reserve Bank of India (Core Investment Companies) Amendment Directions, 2026.

4. These Amendment Directions shall come into force with immediate effect.

5. These Amendment Directions modify the Master Direction as under:

Paragraph 11(21) shall be replaced by:

“11(21) “owned funds” means paid up equity capital, preference shares which are compulsorily convertible into equity, free reserves including quarterly profits, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, as reduced by accumulated loss balance, book value of intangible assets and deferred revenue expenditure, if any;

Inclusion of quarterly profits shall be subject to the following conditions:

a. The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.

b. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:

EP_t = NP_t – 0.25 *D*t
Where:
EP_t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP_t = Net profit up to quarter ‘t’
D = average dividend paid during the last three years

Losses in the current year shall be fully deducted from Owned Fund.

CICs shall not be required to deduct a Right-of-Use (ROU) asset (created in terms of Ind AS 116-Leases) from Owned Fund, provided the underlying asset being taken on lease is a tangible asset.”

Yours faithfully,

Sunil T S Nair
Chief General Manager

**********

Reserve Bank of India (Mortgage Guarantee Companies) Amendment Directions, 2026 – Draft for Comments

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26

January 13, 2026

All Mortgage Guarantee Companies (MGCs)

Dear Sir / Madam,

The Reserve Bank had issued the Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025 (hereafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components reckoned in the computation of Owned Fund, as well as to review the definition of Tier 1 capital being reckoned for complying with extant credit / investment concentration norms.

2. Accordingly, in exercise of the powers conferred under section 45JA of Reserve Bank of India Act, 1934 (Act 2 of 1934), and of all powers enabling it in this behalf, the Reserve Bank having considered it necessary in the public interest and being satisfied that, for the purpose of enabling it to regulate the financial system to the advantage of the country and to prevent the affairs of any Mortgage Guarantee Company (MGC) from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such MGCs, hereby, issues the following Amendment Directions.

3. These Directions shall be called the Reserve Bank of India (Mortgage Guarantee Companies) Amendment Directions, 2026.

4. These Amendment Directions shall come into force with immediate effect.

5. These Amendment Directions modify the Master Direction as under:

(1) Paragraph 8(25) shall be replaced by:

“8(25) “owned fund” means paid up equity capital, free reserves including quarterly profits, contingency reserves maintained as per paragraph 14(a) of these Directions, balance in share premium account, and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, as reduced by accumulated loss balance, book value of intangible assets and deferred revenue expenditure, if any;

Inclusion of quarterly profits shall be subject to the following conditions:

a. The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.

b. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:

EP_t = NP_t – 0.25 *D*t
Where:
EP_t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP_t = Net profit up to quarter ‘t’
D = average dividend paid during the last three years

Losses in the current year shall be fully deducted from Owned Fund.

A MGC shall not be required to deduct a Right-of-Use (ROU) asset (created in terms of Ind AS 116-Leases) from Owned Fund, provided the underlying asset being taken on lease is a tangible asset.”

(2) The following paragraphs shall be inserted after sub paragraph 41(2):

“41(3) The applicable Tier 1 Capital for compliance with the norms stated in sub-paragraphs 41(1) and 41(2) above, shall be determined based on the MGC’s latest available financial statements (audited or subject to limited review).

41(4) The term “Tier 1 Capital” in this context shall be as defined in paragraph 8(31) of the Master Directions.”

Yours faithfully,

Sunil T S Nair
Chief General Manager

**********

Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026 – Draft for Comments

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26

January 13, 2026

All Asset Reconstruction Companies (ARCs)

Dear Sir / Madam,

The Reserve Bank had issued the Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025 (hereafter referred as the ‘Master Direction’) on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components being reckoned in the computation of Owned Fund.

2. Accordingly, in exercise of the powers conferred under Sections 3, 9, 10, 12 and 12A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), and of all the powers enabling it in this behalf, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, and in order to ensure prudent and efficient functioning of Asset Reconstruction Companies, hereby, issues the following Amendment Directions.

3. These Directions shall be called Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026.

4. These Amendment Directions shall come into force with immediate effect.

5. These Amendment Directions modify the Master Direction as under:

Paragraph 11(i)(c) shall be replaced by:

“(c) free reserves (excluding revaluation reserve) including quarterly profits.
Inclusion of quarterly profits shall be subject to the following conditions:

i. The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.

ii. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:

EP_t = NP_t – 0.25 *D*t
Where:
EP_t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP_t = Net profit up to quarter ‘t’
D = average dividend paid during the last three years

Losses in the current year shall be fully deducted from Owned Fund;”

Yours faithfully,

Sunil T S Nair
Chief General Manager

**********

Reserve Bank of India (Standalone Primary Dealers) Amendment Directions, 2026 – Draft for Comments

RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26

January 13, 2026

All Standalone Primary Dealers (SPDs)

Dear Sir / Madam,

The Reserve Bank had issued the Reserve Bank of India (Standalone Primary Dealers) Directions, 2025 (hereafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components reckoned in the computation of Tier 1 capital, as well as to review the definition of Tier 1 capital being reckoned for complying with extant exposure norms.

2. Accordingly, In exercise of the powers conferred under Section 45JA, 45K, 45L and 45M of the Reserve Bank of India Act, 1934 (2 of 1934), and of all powers enabling it in this behalf, the Reserve Bank, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling it to regulate the financial system to the advantage of the country so to do, and to prevent the affairs of any Standalone Primary Dealer (SPD) from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such SPD, hereby, issues the following Amendment Directions.

3. These Directions shall be called the Reserve Bank of India (Standalone Primary Dealers) Amendment Directions, 2026.

4. These Amendment Directions shall come into force with immediate effect.

5. These Amendment Directions modify the Master Direction as under:

(1) Paragraph 9(6) shall be replaced by:

“9(6) Tier 1 capital means paid-up capital, statutory reserves and other disclosed free reserves including quarterly profits.

Inclusion of quarterly profits shall be subject to the following conditions:

a. The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.

b. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:

EP_t = NP_t – 0.25 *D*t
Where:
EP_t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP_t = Net profit up to quarter ‘t’
D = average dividend paid during the last three years

Losses in the current year shall be fully deducted from Tier 1 capital.

Investment in subsidiaries (where applicable), intangible assets, losses in current accounting period, deferred tax asset and losses brought forward from previous accounting periods shall be deducted from the Tier 1 capital.”

(2) The following paragraphs shall be inserted after paragraph 159(6):

“159(7) The applicable Tier 1 Capital for compliance with the norms stated in sub-paragraphs 159(1) to 159(6) above, shall be determined based on the SPD’s latest available financial statements (audited or subject to limited review).

159(8) In this context, the term “Tier 1 Capital” shall be as defined in paragraph 9(6) of the Master Directions.”

Yours faithfully,

Sunil T S Nair
Chief General Manager