The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (All India Financial Institutions – Prudential Norms on Capital Adequacy) Directions, 2025.
The following has been stated namely: -
• The draft directions set out a comprehensive capital framework for all-India financial institutions such as EXIM Bank of India, NABARD, SIDBI, National Housing Bank, and NaBFID.
• The document outlines that these institutions must maintain, on an ongoing basis, a minimum total capital ratio (CRAR) of 9 % of risk-weighted assets, comprising at least 5.5 % Common Equity Tier 1 (CET1) and 7 % Tier 1 capital, with up to 2 % allowed as Tier 2 capital. It defines regulatory capital components in granular detail, stipulating eligibility criteria for CET1, AT1 (Additional Tier 1), and Tier 2 instruments, including features such as perpetual maturity, discretionary dividends, loss-absorption capability and call-option conditions.
• The Directions also prescribe separate capital adequacy calculations at both solo (standalone) and consolidated (group) levels, including rules for consolidation, deductions, and adjustments when subsidiaries engage in non-financial or insurance activities.
• Further, the normative framework sets out boards’ responsibilities in approving internal capital adequacy assessment processes (ICAAP), capital planning, disclosure policies and monitoring of risk profiles, alongside risk-weighting of asset categories (credit risk, market risk, operational risk) and a leverage ratio framework.
• These measures together aim to strengthen the loss-absorbency capacity and supervisory discipline of AIFIs by aligning their capital bases with their risk exposures while promoting transparency and stability of the financial system.
• This shall come into force from November 28, 2025.
[Notification no. - RBI/DOR/2025-26/321 DOR.CAP.REC.240/21-01-002/2025-26]
