Prudential Norms on Capital Adequacy for All India Financial Institutions · DOR.RRC.REC.302/33-01-010/2025-26

RBI/DOR/2025-26/321 DOR.CAP.REC.240/21-01-002/2025-26 November 28, 2025

Previous Versions Reserve Bank of India (All India Financial Institutions (AIFIs) - Prudential Norms on Capital Adequacy) Directions, 2025 (Updated as on June 16, 2026)

Table of Contents Chapter I Preliminary A Short title and commencement B Applicability C Definitions Chapter II Board approved policies and scope of application A Instructions regarding Board approved policies and documents to be reviewed by the Board B Scope of application of capital adequacy framework Chapter III Regulatory capital A Composition of regulatory capital B Common Equity Tier 1 (CET 1) capital C Additional Tier 1 (AT 1) capital D Tier 2 capital E Minimum requirements to ensure loss absorbency of AT 1 instruments at pre-specified trigger and of all non-equity regulatory capital instruments at the point of non-viability F Recognition of minority interest (i.e., non-controlling interest) and other capital issued out of consolidated subsidiaries that is held by third parties G Regulatory adjustments / deductions H Transitional arrangements for an AIFI Chapter IV Risk weighted assets (RWAs) A Capital charge for credit risk B External credit assessments C Credit risk mitigation D Capital charge for market risk E Capital Charge for Operational Risk Chapter V Supervisory review and evaluation process (SREP) and market discipline A Introduction to the SREP and ICAAP B ICAAP of an AIFI C Select operational aspects of the ICAAP D Format of an ICAAP document E Market discipline Chapter VI Leverage ratio framework A Minimum requirement and scope of application of the leverage ratio B Scope of consolidation C Capital measure D Exposure measure E Disclosure and reporting requirements F Disclosure templates Chapter VII Repeal and Other provisions Annex I Reporting format for details of investments by FIIs and NRIs in PNCPS qualifying as AT 1 capital Annex II Format for reporting of capital issuances Annex III Pillar 3 Disclosure requirements for an AIFI

In exercise of the powers conferred by Section 45L of the Reserve Bank of India Act, 1934, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest and in the interest of financial sector policy so to do, hereby, issues the Directions hereinafter specified.

Chapter I Preliminary

A Short title and commencement

1. These Directions shall be called the Reserve Bank of India (All India Financial Institutions (AIFIs) - Prudential Norms on Capital Adequacy) Directions, 2025.
2. These Directions shall come into effect immediately upon issuance.

B Applicability 3. These Directions shall be applicable to All India Financial Institutions (hereinafter collectively referred to as ‘AIFIs’ and individually as a ‘AIFI’), viz., Export-Import Bank of India (EXIM Bank), National Bank for Agriculture and Rural Development (NABARD), National Housing Bank (NHB), Small Industries Development Bank of India (SIDBI), and National Bank for Financing Infrastructure and Development (NaBFID).

C Definitions 4. In these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below: (1) ‘Available for Sale (AFS)’ means the category of investment portfolio of an AIFI which includes investment that do not fall within the Held to Maturity (HTM) or Held for Trading (HFT) category; (2) ‘Banking book’ shall mean any all items which are not included under trading book as per these Directions; (3) ‘Basis Risk’ means the risk that emanates from the changes in interest rate of different assets, liabilities and off-balance sheet items in different magnitudes; (4) ‘Capital Funds’ means the total regulatory capital of an AIFI, fulfilling the criteria defined in the prescribed capital regulations as per Chapter II of these Directions, as per the last audited balance sheet; (5) ‘Central Counterparty’ (CCP) means a system provider, who by way of novation interposes between system participants in the transactions admitted for settlement, thereby becoming the buyer to every seller and the seller to every buyer, for the purpose of effecting settlement of their transactions; (6) ‘Clearing Member’ means a member of, or a direct participant in, a CCP that is entitled to enter into a transaction with the CCP, regardless of whether it enters into trades with a CCP for its own hedging, investment or speculative purposes or whether it also enters into trades as a financial intermediary between the CCP and other market participants; Note - For the purpose of these guidelines, where a CCP has a link to a second CCP, that second CCP is to be treated as a clearing member of the first CCP. Whether the second CCP’s collateral contribution to the first CCP is treated as initial margin, or a default fund contribution shall depend upon the legal arrangement between the CCPs. In such cases, if any, the Reserve Bank shall be consulted for determining the treatment of this initial margin and default fund contributions; (7) ‘Client’ means a party to a transaction with a CCP through either a clearing member acting as a financial intermediary, or a clearing member guaranteeing the performance of the client to the CCP; (8) ‘Control’ shall have the same meaning as assigned to it under clause (27) of Section 2 of the Companies Act, 2013 as amended from time to time; (9) ‘Corporate Bonds / Debentures’ for the purpose of these Directions mean debt securities which create or acknowledge indebtedness, including (i) debentures (ii) bonds (iii) commercial papers (iv) certificate of deposits and such other securities of a company, a multilateral financial institution (MFI), or a body corporate constituted by or under a Central Act or a State Act, whether constituting a charge on the assets of the company or body corporate or not, and includes convertible instruments and instruments of a perpetual nature, but does not include debt securities issued by Central Government or a State Government, or such other persons as may be specified by the Reserve Bank, security receipts and securtised debt instruments; (10) ‘Counterparty credit risk’ (CCR) means the risk that the counterparty to a transaction may default before the final settlement of the transaction's cash flows. An economic loss would occur if the transactions or portfolio of transactions with the counterparty has a positive economic value at the time of default. Unlike a firm’s exposure to credit risk through a loan, where the exposure to credit risk is unilateral and only the lending AIFI faces the risk of loss, CCR creates a bilateral risk of loss, i.e., the market value of the transaction can be positive or negative to either counterparty to the transaction. The market value is uncertain and can vary over time with the movement of underlying market factors; (11) ‘Credit Risk’ means the potential that an AIFI's borrower or counterparty may fail to meet its obligations in accordance with agreed terms and also includes the possibility of losses associated with diminution in the credit quality of borrowers or counterparties; (12) ‘Credit Valuation Adjustment (CVA)’ means an adjustment to the mid-market valuation of the portfolio of trades with a counterparty. This adjustment reflects the market value of the credit risk due to any failure to perform on contractual agreements with a counterparty. This adjustment may reflect the market value of the credit risk of the counterparty or the market value of the credit risk of both the AIFI and the counterparty; (13) ‘Cross-product Netting’ means the inclusion of transactions of different product categories within the same netting set; (14) ‘Current Exposure (often also called Replacement Cost) under the Current Exposure Method’ means the larger of zero, or the market value of a transaction or portfolio of transactions within a netting set with a counterparty that would be lost upon the default of the counterparty, assuming no recovery on the value of those transactions in bankruptcy; (15) ‘Current or Valid Credit Rating’ means a credit rating granted by a credit rating agency in India, registered with the Securities and Exchange Board of India (SEBI) and fulfilling the following conditions: (i) The credit rating letter shall not be more than one month old on the date of opening of the issue; (ii) The rating rationale shall not be more than one year old on the date of opening of the issue; (iii) The credit rating letter and the rating rationale shall preferably be part of the offer document; (iv) In the case of secondary market acquisition, the credit rating of the issue shall be in force and confirmed from the monthly bulletin published by the respective rating agency; (16) ‘Default funds’ means clearing member’s funded or unfunded contributions towards, or underwriting of, a CCP’s mutualised loss sharing arrangements. The description given by a CCP to its mutualised loss sharing arrangements is not determinative of their status as a default fund; rather, the substance of such arrangements shall govern their status. Note - Default funds are also known as clearing deposits or guarantee fund contributions (or any other names); (17) ‘Deferred Tax Assets (DTAs)’ shall have the same meaning as assigned under the extant accounting standards; (18) ‘Derivative’ shall have the same meaning as assigned to it in Section 45U(a) of the RBI Act, 1934; (19) ‘Duration (Macaulay Duration)’ measures the price volatility of fixed income securities often used in the comparison of the interest rate risk between securities with different coupons and different maturities. Note - Duration is calculated the weighted average of the present value of all the cash flows associated with a fixed income security. It is expressed in years. The duration of a fixed income security is always shorter than its term to maturity, except in the case of zero-coupon securities where they are the same; (20) ‘Exchange’ means ‘recognised stock exchange’ and shall have the same meaning as defined in Section 2 (f) of Securities Contracts (Regulation) Act, 1956; (21) ‘Financial Services Company’ means a company engaged in the 'business of financial services as defined in the Reserve Bank of India (All India Financial Institutions – Undertaking of Financial Services) Directions, 2025; (22) ‘Forward Contract’ means an agreement between two parties to buy or sell an agreed amount of a financial instrument or currency at an agreed price, for delivery on an agreed future date; Note - In contrast to a futures contract, a forward contract is not transferable or exchange tradable, its terms are not standardised and no margin is exchanged. The buyer of the forward contract is said to be long the contract and the seller is said to be short the contract; (23) ‘General Market Risk’ means risk of losses in on-and off-balance sheet positions arising from movements in market prices; (24) ‘Government Security’ shall have the same meaning as assigned to it in Section 2(f) of the Government Securities Act, 2006; (25) ‘Going-Concern Capital’, from regulatory perspective, is the capital which shall absorb losses without triggering bankruptcy of the AIFI; (26) ‘Gone-Concern Capital’, from regulatory perspective, is the capital which shall absorb losses only in a situation of liquidation of the AIFI; (27) ‘Hedging’ means taking action to eliminate or reduce exposure to any type of risk; (28) ‘Held for Trading’ means the category of investment portfolio maintained by an AIFI with the intention to trade in securities by taking advantage of short-term price / interest rate movements; (29) ‘Held to Maturity (HTM)’ means the category of investment portfolio maintained by an AIFI with an intention to hold securities up to maturity; (30) ‘Horizontal Disallowance’ means a disallowance of offsets to required capital used for assessing market risk for regulatory capital. In order to calculate the capital required for interest rate risk of a trading book, offsetting of long and short positions is permitted. However, interest rate risk of instruments at different horizontal points of the yield curve are not perfectly correlated. Hence, this method requires that a portion of these offsets be disallowed; (31) ‘Infrastructure Projects / Infrastructure Lending’ means any credit facility in whatever form extended by an AIFI to any infrastructure facility that is a project in any of the sectors incorporated in the latest updated Harmonized Master List of Infrastructure Sub-sectors published by the Government of India; (32) ‘Initial Margin’ means a clearing member’s or client’s funded collateral posted to the CCP to mitigate the potential future exposure of the CCP to the clearing member arising from the possible future change in the value of their transactions. Initial margin shall not include contributions to a CCP for mutualised loss sharing arrangements. Note - In cases where a CCP uses initial margin to mutualise losses among the clearing members, it shall be treated as a default fund exposure; (33) ‘Interest Rate Risk’ means risk that the financial value of assets or liabilities (or inflows / outflows) may be altered because of fluctuations in interest rates; (34) ‘Investments in entities that are outside of the scope of regulatory consolidation’ means investments in entities that have not been consolidated at all or have not been consolidated in such a way as to result in their assets being included in the calculation of consolidated risk-weighted assets of the group; (35) ‘Large Exposure’ means the sum of all exposure value of an AIFI measured in terms of Reserve Bank of India (All India Financial Institutions – Concentration Risk Management) Directions, 2025, to a counterparty and / or a group of connected counterparties, if it is equal to or above 10 per cent of an AIFI’s eligible capital base; (36) ‘Leverage Ratio’ is the capital measure (the numerator) divided by the exposure measure (the denominator), with this ratio expressed as a percentage; (37) ‘Listed Security’ is a security, which is listed on an exchange; (38) ‘Long Position’ refers to a position where gains arise from a rise in the value of the underlying; (39) ‘Market Risk’ means the risk of losses in on-balance sheet and off-balance sheet positions arising from movements in market prices; (40) ‘Modified Duration’ or volatility of an interest-bearing security is its Macaulay duration divided by one plus security’s yield to maturity (YTM) per period. It represents the percentage change in a securities’ price for a 100 basis points change in yield (generally accurate for only small changes in the yield). where: MD = Modified duration P = Gross price (i.e., clean price plus accrued interest). dP = Corresponding small change in price. dY = Small change in yield compounded with the frequency of the coupon payment; (41) ‘Mortgage-backed Security’ shall have the same meaning as assigned under Reserve Bank of India (All India Financial Institutions – Securitisation Transactions) Directions, 2025; (42) ‘Netting Set’ means a group of transactions with a single counterparty that are subject to a legally enforceable bilateral netting arrangement and for which netting is recognised for regulatory capital purposes. Each transaction that is not subject to a legally enforceable bilateral netting arrangement which is recognised for regulatory capital purposes shall be interpreted as its own netting set for the purpose of these Directions; (43) ‘Net Interest Margin’ means the net interest income divided by average interest earning assets; (44) ‘Net Worth’ shall have the same meaning as assigned to it under clause (57) of Section 2 of Companies Act, 2013, as amended from time to time; (45) ‘Non-financial Services Company’ means a company not engaged in any of the activities being conducted by a financial services company; (46) ‘Offsetting Transaction’ means the transaction leg between the clearing member and the CCP when the clearing member acts on behalf of a client (e.g., when a clearing member clears or novates a client’s trade); (47) ‘One-sided Credit Valuation Adjustment’ is a credit valuation adjustment that reflects the market value of the credit risk of the counterparty to an AIFI but does not reflect the market value of the credit risk of an AIFI to the counterparty; (48) ‘Open Position’ means the net difference between the amounts payable and amounts receivable in a particular instrument or commodity. It results from the existence of a net long or net short position in the particular instrument or commodity; (49) ‘Operational Risk’ means the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk. Legal risk includes, but is not limited to, exposure to fines, penalties, or punitive damages resulting from supervisory actions, as well as private settlements; (50) ‘Option’ means a contract which grants the buyer the right, but not the obligation, to buy (call option) or sell (put option) an asset, commodity, currency or financial instrument at a specified rate (exercise price) on or before an agreed date (expiry or settlement date); (51) ‘Overcollateralisation’ means any form of credit enhancement by virtue of which underlying exposures are posted in value which is higher than the value of the securitisation notes; (52) ‘Outstanding Exposure at Default (EAD)’ for a given OTC derivative counterparty is defined as the greater of zero and the difference between the sum of EADs across all netting sets with the counterparty and the credit valuation adjustment (CVA) for that counterparty which has already been recognised by an AIFI as an incurred write-down (i.e., a CVA loss); (53) ‘Qualifying Central Counterparty’ (QCCP) means an entity that is licensed to operate as a CCP (including a license granted by way of confirming an exemption) and is permitted by the appropriate regulator / overseer to operate as such with respect to the products offered. This is subject to the provision that the CCP is based and prudentially supervised in a jurisdiction where the relevant regulator / overseer has established, and publicly indicated that it applies to the CCP on an ongoing basis, domestic rules and regulations that are consistent with the CPSS-IOSCO Principles for Financial Market Infrastructures; (54) ‘Quoted Security’ is a security for which market prices are available at stock exchanges / reporting platforms / trading platforms authorized by the Reserve Bank / Securities and Exchange Board of India (SEBI); (55) ‘Rated Security’ means a security which is subjected to a detailed credit rating exercise by a SEBI-registered credit rating agency and shall carry current or valid credit rating; (56) ‘Repo’ and ‘Reverse Repo’ shall have the same meaning as defined in Section 45U of the Reserve Bank of India Act, 1934. For the purpose of these Directions, the word ‘repo’ is used to mean both ‘repo’ and ‘reverse repo’ with the appropriate meaning applied contextually; (57) ‘Securities’ shall have the same meaning as defined in Section 2(h) of Securities Contracts (Regulation) Act, 1956; (58) ‘Securities Financing Transactions’ (SFTs) means transactions such as repurchase agreements, reverse repurchase agreements, security lending and borrowing, collateralised borrowing and lending (CBLO) and margin lending transactions, where the value of the transactions depends on market valuations and the transactions are often subject to margin agreements; (59) ‘Securtised Debt Instrument’ means securities of the nature referred to in Section 2(h)(ie) of the Securities Contracts (Regulation) Act, 1956; (60) ‘Security Receipts’ shall have the same meaning as defined in Section 2(1)(zg) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (61) ‘Significant Influence’ shall have the same meaning as assigned under the extant accounting standards; (62) ‘Specific Market Risk’ refers to the risk associated with a specific security, issuer or company, as opposed to the risk associated with a market or market sector (general market risk); (63) ‘Subsidiary’ shall have the same meaning as assigned under the extant accounting standards. (64) ‘Trade exposures’ include the current and potential future exposure of a clearing member or a client to a CCP arising from OTC derivatives, exchange traded derivatives transactions or SFTs, and initial margin. The current exposure of a clearing member includes the variation margin due to the clearing member but not yet received; (65) ‘‘Trading book’ shall include all instruments that are classified as ‘Held for Trading’ or 'Available for Sale' (AFS) as per Reserve Bank of India (All India Financial Institutions – Classification, Valuation, and Operation of Investment Portfolio) Directions, 2025; (66) ‘Tranche’ means a contractually established segment of the credit risk associated with an exposure or a pool of exposures, where a position in the segment entails a risk of credit loss greater than or less than a position of the same amount in another segment, without taking account of credit protection provided by third parties directly to the holders of positions in the segment or in other segments Explanation – Securitisation notes issued by the SPE and credit enhancement facilities available shall be treated as tranches; (67) Tranche Maturity’ means the tranche’s effective maturity in years and is measured as prescribed in paragraphs 99 to 101; (68) ‘Tranche Thickness’ means the measure calculated as detachment point (D) minus attachment point (A), where D and A are calculated in accordance with paragraphs 94 to 98; (69) ‘Unrated Securities’ means securities, which do not have a current or valid credit rating by a SEBI-registered credit rating agency; (70) ‘Value at Risk’ (VAR) means a method for calculating and controlling exposure to market risk. VAR is a single number (amount) which estimates the maximum expected loss of a portfolio over a given time horizon (the holding period) and at a given confidence level; (71) ‘Variation Margin’ means a clearing member’s or client’s funded collateral posted on a daily or intraday basis to a CCP based upon price movements of their transactions; (72) ‘Vertical Disallowance’ means a reversal of the offsets of a general market risk charge of a long position by a short position in two or more securities in the same time band in the yield curve where the securities have differing credit risks under the method followed for determining regulatory capital necessary to cushion market risk. The terms appearing in paragraphs 80 to 118 on ‘Securitisation Exposures’ shall bear the meanings assigned to them under Reserve Bank of India (All India Financial Institutions – Securitisation Transactions) Directions, 2025, unless stated otherwise herein. 5. All other expressions unless defined herein shall have the same meaning as have been assigned to them under the applicable Acts, rules / regulations made thereunder, or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be.