The Reserve Bank of India (RBI), on May 8, 2026, issued the Reserve Bank of India (Payments Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 to amend the framework governing inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for Payments Banks under the existing Master Direction issued in November 2025.
Through the amendment, RBI has permitted Payments Banks to reckon profits of the current financial year for Capital to Risk Weighted Assets Ratio (CRAR) calculation on a quarterly basis, subject to quarterly financial statements being either audited or subjected to limited review. The eligible profit to be included in CET1 capital is to be calculated using a prescribed formula based on net profits up to the relevant quarter after adjusting a proportion of the average dividend paid during the preceding three financial years.
The revised framework also mandates full deduction of cumulative net losses up to the relevant quarter while computing CET1 capital. The amendment has been introduced with immediate effect and aims to refine prudential capital adequacy treatment for Payments Banks while ensuring greater consistency and regulatory prudence in capital computation. [RBI/2026-27/81 | DOR.CAP.REC.No.70/21.01.002/2026-27]
