Reserve Bank of India (Commercial Banks – Miscellaneous) Supervisory Directions, 2026
RBI notification RBI/DoS/2026-27/416 · 31 Jul 2026
RBI notification RBI/DoS/2026-27/416 · 31 Jul 2026
Summary
Check the official recordThe Reserve Bank of India issues these directions to regulate commercial banks regarding IT system access, monitoring of fund usage, and fraud prevention. The directions establish a Prompt Corrective Action framework based on capital, asset quality, and leverage thresholds. Banks must implement fair interest charging practices, manage inoperative accounts, and maintain nomination facilities. The framework mandates internal vigilance systems, including the appointment of a Chief of Internal Vigilance, and introduces a Protected Disclosure Scheme for reporting corruption or fraud. Private sector and foreign banks must comply with vigilance and disclosure requirements, while public sector banks must submit quarterly vigilance monitoring returns. These directions take immediate effect and repeal previous instructions on these subjects.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DoS/2026-27/416 DoS.CO.PPG.10/11.01.005/2026-27 July 31, 2026
Reserve Bank of India (Commercial Banks – Miscellaneous) Supervisory Directions, 2026
Table of Contents
In exercise of the powers conferred by Section 35-A of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues Directions hereinafter specified.
A. Short Title and Commencement
B. Applicability
For the purpose of these Directions, ‘Commercial Banks’ means banking companies (other than Small Finance Banks, Payments Banks and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949.
Provided that provisions of Chapter IX and Chapter X of these Directions shall be applicable only to Private Sector Banks and Foreign Banks, while the provisions of Chapter XI of these Directions shall be applicable only to Public Sector Banks.
C. Definitions
(1) meaningful scrutiny of the periodical progress reports and operating / financial statements of the borrowers; (2) regular visits to the assisted units and inspection of securities charged / hypothecated to the bank; (3) periodical scrutiny of the books of accounts of the borrowers; (4) stock audits depending upon the extent of exposure; (5) obtention of certificates from the borrowers that the funds have been utilised for the purposes approved and in case of incorrect certification, initiation of prompt action as may be warranted, which may include withdrawal of the facilities sanctioned and legal recourse as well. In case a specific certification regarding diversion / siphoning of funds is desired from the auditors of the borrowers, a separate mandate may be awarded to them and appropriate covenants shall be incorporated in the loan agreements; and (6) examination of all aspects of diversion of funds during internal audit / inspection of the branches and at the time of periodical reviews.
The objective of the Prompt Corrective Action (PCA) Framework is to enable supervisory intervention at appropriate time and require the bank to initiate and implement remedial measures in a timely manner, so as to restore its financial health. The PCA Framework is also intended to act as a tool for effective market discipline. The PCA Framework does not preclude RBI from taking any other action as it deems fit at any time, in addition to the corrective actions prescribed in the Framework.
Capital, Asset Quality and Leverage will be the key areas for monitoring in the Framework. Indicators to be tracked for Capital, Asset Quality and Leverage shall be Capital to Risk-weighted Assets Ratio (CRAR) / Common Equity Tier 1 (CET 1) Ratio {the percentage of common equity capital, net of regulatory adjustments, to total risk weighted assets as prescribed in Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Directions, 2025}, Net Non-Performing Asset (NPA) Ratio (the percentage of net NPAs to net advances) and Tier I Leverage Ratio {the percentage of the capital measure to the exposure measure as prescribed in Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Directions, 2025} respectively. Breach of any of the following risk threshold may result in invocation of PCA:
PCA Matrix – Parameters, Indicators and Risk Thresholds
| Parameter | Indicator | Risk Threshold 1 | Risk Threshold 2 | Risk Threshold 3 |
|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) |
| Capital (Breach of either CRAR or CET 1 ratio) | CRAR - Minimum regulatory prescription for Capital to Risk Assets Ratio + applicable Capital Conservation Buffer (CCB) and/or Regulatory Pre-Specified Trigger of Common Equity Tier 1 Ratio (CET 1 PST) + applicable Capital Conservation Buffer (CCB) | Upto 250 basis points (bps) below the Indicator prescribed at column (2) | More than 250 bps but not exceeding 400 bps below the Indicator prescribed at column (2) | In excess of 400 bps below the Indicator prescribed at column (2) |
| Upto 162.50 bps below the Indicator prescribed at column (2) | More than 162.50 bps below but not exceeding 312.50 bps below the Indicator prescribed at column (2) | In excess of 312.50 bps below the Indicator prescribed at column (2) | ||
| Breach of either CRAR or CET 1 ratio to trigger PCA | ||||
| Asset Quality | Net Non-Performing Advances (NNPA) ratio | >=6.0 per cent but <9.0 per cent | >=9.0 per cent but < 12.0 per cent | >=12.0 per cent |
| Leverage | Regulatory minimum Tier 1 Leverage Ratio | Upto 50 bps below the regulatory minimum | More than 50 bps but not exceeding 100 bps below the regulatory minimum | More than 100 bps below the regulatory minimum |