The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025 for public comments. Framed under Section 35A of the Banking Regulation Act, 1949, these directions establish a comprehensive framework for capital adequacy and risk management applicable to Payments Banks (PBs). The aligns the capital structure of PBs with Basel III standards, ensuring resilience, financial stability, and the capacity to absorb losses without compromising solvency or depositor protection.
The framework introduces a three-pillar approach: Pillar I (Minimum Capital Requirements), Pillar II (Supervisory Review and Evaluation Process – SREP), and Pillar III (Market Discipline). Payments Banks must maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15% on an ongoing basis, comprising Common Equity Tier 1 (CET 1) of at least 6%, Tier 1 Capital of 7.5%, and Tier 2 Capital capped at 7.5% of risk-weighted assets. The directions detail the composition of CET 1, Additional Tier 1 (AT 1), and Tier 2 capital, regulatory adjustments, and deduction norms. They also define key concepts such as leverage ratio, credit risk, market risk, operational risk, and the treatment of deferred tax assets and revaluation reserves.
Further, the prescribes stringent eligibility and operational conditions for issuance of Perpetual Non-Cumulative Preference Shares (PNCPS) and Additional Tier 1 debt instruments, including provisions on dividend payments, optionality, and regulatory approvals for buy-back or redemption. It emphasizes robust internal governance, periodic revaluation of assets, and transparent disclosure of capital structure. The directions aim to bring Payments Banks under a uniform prudential regime consistent with global best practices in risk-based capital management and supervisory oversight.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/211 DOR.CAP.REC.130/21-01-002/2025-26]
