Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026
RBI notification RBI/2026-27/79 · 08 May 2026
RBI notification RBI/2026-27/79 · 08 May 2026
Summary
Check the official recordThe Reserve Bank of India amends the Master Direction on capital adequacy for commercial banks. The amendment changes the rules for the inclusion of quarterly profits in Common Equity Tier 1 capital. Banks now calculate eligible profits for the current financial year on a quarterly basis. Banks must subject financial statements to an audit or a limited review each quarter. Banks calculate the eligible profit amount using a specific formula that accounts for net profit and average dividends from the last three financial years. Banks must deduct the cumulative net loss in full when they calculate capital for the relevant quarter. These instructions apply to all commercial banks. The directions take effect immediately.
What you must do
Key dates
Who is affected
RBI/2026-27/79 DOR.CAP.REC.No.68/21.01.002/2026-27 May 08, 2026
Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026
The Reserve Bank had issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred as the ‘Master Direction’), on November 28, 2025, as amended from time to time. Based on a review, it is proposed to amend the provision relating to inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital by a Commercial Bank.
Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Amendment Directions hereinafter specified.
These instructions shall be called the Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026.
These Directions shall come into force with immediate effect.
These Amendment Directions modify the Master Direction as under:
Paragraph 12(x) shall be replaced by:
“(x) A bank may reckon the profits in current financial year for CRAR calculation on a quarterly basis subject to the following conditions:
(a) The financial statements shall be audited or subjected to limited review on a quarterly basis; and
(b) The amount which can be reckoned shall be arrived at by using the following formula:
EP t = NP t
Where:
EP t = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
NP t = Net profit up to quarter ‘t’
D = average dividend paid during the last three financial years
The cumulative net loss up to the quarter end shall be fully deducted while calculating CET1 capital for the relevant quarter;”
Yours faithfully,
(Sunil T S Nair) Chief General Manager