The Reserve Bank of India (RBI), on April 8, 2026, issued draft Amendment Directions to review the guidelines on inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for the computation of Capital to Risk Weighted Assets Ratio (CRAR) for banks. These draft directions apply to commercial banks, small finance banks, and payments banks, and are part of RBI’s ongoing efforts to refine prudential norms on capital adequacy. Stakeholders have been invited to submit comments by April 29, 2026.
At present, banks are permitted to include current year profits in CET1 capital on a quarterly basis only if the incremental provisions for non-performing assets (NPAs) during the previous financial year do not deviate by more than 25% from the average of all four quarters. Based on a regulatory review, RBI has proposed to remove this qualifying condition, thereby simplifying the framework for inclusion of interim profits in regulatory capital calculations.
The proposed amendment aims to enhance ease of compliance and align capital computation practices with evolving banking conditions. By eliminating the restriction linked to NPA provisioning variability, the RBI seeks to provide greater flexibility to banks while maintaining prudential discipline. This move was also highlighted in the Statement on Developmental and Regulatory Policies dated April 8, 2026, reflecting RBI’s consultative approach to regulatory changes.
[Notification No. 2026-2027/45]
