The RBI has amended the guidelines for commercial banks regarding the recognition of current year profits in CRAR calculations, allowing quarterly recognition subject to audit requirements.
RBI (Commercial Banks – Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026
The Reserve Bank of India has issued the Fifth Amendment Directions concerning the Prudential Norms on Capital Adequacy for commercial banks. This amendment now permits banks to recognize current year profits for the Computation of Capital to Risk (Weighted) Assets Ratio (CRAR) on a quarterly basis.
The updated provisions also stipulate that such recognition must comply with prescribed audit and limited review requirements, thereby enhancing the transparency and credibility of financial reporting by banks. This amendment is expected to provide banks with more flexibility in managing their capital adequacy while ensuring robust supervisory mechanisms.
For professionals in the banking sector, these changes highlight the evolving landscape of banking regulations and the necessity for banks to adapt to new compliance requirements, particularly regarding capital management strategies.
Citations
- RBI Circular (2026) RBI News
