The Reserve Bank of India, through its Second Amendment Directions dated February 13, 2026, has revised the Small Finance Banks – Prudential Norms on Capital Adequacy Directions, 2025 to clarify capital treatment of Irrevocable Payment Commitments (IPCs) issued by banks to clearing corporations of stock exchanges on behalf of clients. The amendment modifies paragraph 74(6) under the Risk Weighted Assets framework and specifies that such IPCs shall be treated as financial guarantees with a Credit Conversion Factor (CCF) of 100 percent. However, capital is required to be maintained only on the portion classified as Capital Market Exposure (CME) under the Small Finance Banks – Concentration Risk Management Directions, 2025. The applicable risk weight for such exposure shall be 125 percent. The revised norms aim to align capital adequacy requirements with the updated credit facilities and exposure framework. The amendment becomes effective from April 1, 2026 or earlier upon adoption by the bank.
Reserve Bank of India
RBI/2025-26/218
DOR.CRE.REC.409/21-01-002/2025-26 | Dated: February 13, 2026
Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026
Please refer to the 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 the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 and in exercise of the powers conferred by the section 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called 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 modify paragraph 74(6) in ‘Chapter IV – Risk weighted assets (RWAs)’ of the Directions as under:
“Issue of irrevocable payment commitment by a bank to clearing corporations of stock exchanges on behalf of its client is a financial guarantee with a CCF of 100 per cent. However, capital shall be maintained only on the exposure reckoned as capital market exposure (CME) in terms of paragraph of the Reserve Bank of India (Small Finance Banks – Concentration Risk Management) Directions, 2025. Thus, capital is to be maintained on the amount taken for CME and the risk weight shall be 125 per cent thereon.”
4. The above amendment shall come into force from the date a bank decides to implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 or from April 1, 2026, whichever is earlier.
(Vaibhav Chaturvedi)
Chief General Manager
