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’:

1. Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.

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

3. Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second 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

Common Equity Tier 1 capital rules revised as quarterly profit recognition conditions for CRAR are proposed for removal. Reserve Bank of India has issued draft amendment directions on the inclusion of quarterly profits in Common Equity Tier 1 capital for CRAR computation by commercial banks, small finance banks and payments banks. The draft proposes revisions to the prudential norms on capital adequacy and invites public comments. The existing rule for commercial banks permits quarterly recognition of current-year profits for CRAR calculation subject to a condition on incremental provisions for non-performing assets, and the proposed review removes that qualifying condition.