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RBI Revises Capital Adequacy Norms for Small Finance Banks
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Reserve Bank of Indiabankingcorporate

RBI Revises Capital Adequacy Norms for Small Finance Banks

May 15, 2026

Amendments involving capital adequacy norms have been made for Small Finance Banks, revising quarterly profit inclusion in CET1 capital calculations alongside audit requirements.

RBI (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026

The Reserve Bank of India has announced amendments to the capital adequacy norms applicable to Small Finance Banks. The Fourth Amendment Directions provide revisions concerning the inclusion of quarterly profits into Common Equity Tier 1 (CET1) capital calculations.

The recently issued framework outlines specific audit requirements and introduces a revised profitability eligibility formula, ensuring that the banks can sustainably include their profits while maintaining regulatory compliance. This approach reflects the RBI's commitment to strengthening the financial resilience of Small Finance Banks.

For legal and banking practitioners, this amendment necessitates a thorough understanding of the new capital adequacy requirements, preparing banks to align their operations accordingly to meet compliance obligations effectively.

Citations

  • RBI Circular (2026) RBI News
Practice Areas:bankingcorporate

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