The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Regional Rural Banks - Prudential Norms on Capital Adequacy) Directions, 2025.
The following has been stated: -
•The RBI (Regional Rural Banks - Prudential Norms on Capital Adequacy) Directions, 2025, are applicable immediately to all RRBs, specifying minimum capital requirements.
•RRBs must maintain a minimum Capital to Risk Weighted Assets Ratio (CRAR) of 9%, with Tier 1 capital ≥7% of RWAs and Tier 2 capital limited to 100% of Tier 1.
•Tier 1 capital includes paid-up capital, reserves, revaluation reserves (with conditions), profit balances, and qualifying perpetual debt instruments (PDIs) with strict terms.
•Risk weights for on- and off-balance sheet items are defined, including loans, investments, derivatives, and guarantees, to compute risk-adjusted RWAs for CRAR calculation.
•Detailed regulatory adjustments/deductions from capital, treatment of deferred tax assets, and rules for bilateral netting and credit guarantees are prescribed for prudential management.
•These directions shall come into effect from November 28, 2025.
[Notification No.:RBI/DOR/2025-26/261 DOR.CAP.REC.170/21-01-002/2025-26]
