Draft Amendment Directions on CET1 Capital and Quarterly Profits for CRAR
Summary
The Reserve Bank of India released draft amendment directions on April 8, 2026, proposing to remove the qualifying condition linking quarterly profit inclusion in CET1 capital to NPA provision deviations. Currently, banks may reckon quarterly profits only if incremental NPA provisions have not deviated more than 25% from the four-quarter average. Comments are invited until April 29, 2026.
What changed
The RBI proposes eliminating the 25% NPA provision deviation threshold that currently restricts banks from including quarterly profits in CET1 capital for CRAR computation. Under the draft directions (Fourth Amendment for Commercial Banks and Small Finance Banks; Second Amendment for Payments Banks), banks would be able to reckon current financial year profits quarterly without meeting this qualifying condition.
Affected banks—commercial banks, small finance banks, and payments banks—should prepare for potential changes to their capital adequacy calculations. Removing this condition could provide greater flexibility in capital management and potentially improve reported CRAR ratios, subject to final RBI approval following the consultation period.
What to do next
- Review the draft amendment directions on RBI website
- Assess impact on current CRAR calculations
- Submit feedback via Connect 2 Regulate or email by April 29, 2026
Archived snapshot
Apr 9, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
Press Releases
| () | |
| Date : Apr 08, 2026 | |
| RBI invites public comments on Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’ | |
| | The Reserve Bank of India (RBI) has released today the following Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’:
1. [Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026](https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=4968).
2. [Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026](https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=4969).
3. [Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026](https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=4970).
The comments on the said Draft Amendment Directions are invited from the stakeholders till April 29, 2026. The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on the Reserve Bank’s website or may alternatively be forwarded to:
The Chief General Manager
Balance Sheet Group
Department of Regulation, Central Office
Reserve Bank of India, 13th Floor
Shahid Bhagat Singh Marg
Fort
Mumbai – 400 001
Or
by email
with the subject line Feedback on Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’.
Background and Objective
Currently, Commercial Banks (excluding Regional Rural Banks and Local Area Banks) may reckon the profits in current financial year for CRAR calculation on a quarterly basis provided the incremental provisions made for non-performing assets (NPAs) at the end of the any of the four quarters of the previous financial year have not deviated more than 25 per cent from the average of the four quarters. Based on a review, it has been decided to do away with this qualifying condition of incremental provisions for NPAs. Accordingly, RBI has proposed revisions in the matter. As announced in the Statement on Developmental and Regulatory Policies dated April 08, 2026, the draft Directions in this regard are being issued for public consultation.
(Brij Raj)
Chief General Manager
Press Release: 2026-2027/45 | | The Reserve Bank of India (RBI) has released today the following Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’:
- Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
- Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
- Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026. The comments on the said Draft Amendment Directions are invited from the stakeholders till April 29, 2026. The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on the Reserve Bank’s website or may alternatively be forwarded to:
The Chief General Manager
Balance Sheet Group
Department of Regulation, Central Office
Reserve Bank of India, 13th Floor
Shahid Bhagat Singh Marg
Fort
Mumbai – 400 001
Or
by email
with the subject line Feedback on Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’.
Background and Objective
Currently, Commercial Banks (excluding Regional Rural Banks and Local Area Banks) may reckon the profits in current financial year for CRAR calculation on a quarterly basis provided the incremental provisions made for non-performing assets (NPAs) at the end of the any of the four quarters of the previous financial year have not deviated more than 25 per cent from the average of the four quarters. Based on a review, it has been decided to do away with this qualifying condition of incremental provisions for NPAs. Accordingly, RBI has proposed revisions in the matter. As announced in the Statement on Developmental and Regulatory Policies dated April 08, 2026, the draft Directions in this regard are being issued for public consultation.
(Brij Raj)
Chief General Manager
Press Release: 2026-2027/45 |
| The Reserve Bank of India (RBI) has released today the following Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’:
- Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
- Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026.
- Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026. The comments on the said Draft Amendment Directions are invited from the stakeholders till April 29, 2026. The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on the Reserve Bank’s website or may alternatively be forwarded to:
The Chief General Manager
Balance Sheet Group
Department of Regulation, Central Office
Reserve Bank of India, 13th Floor
Shahid Bhagat Singh Marg
Fort
Mumbai – 400 001
Or
by email
with the subject line Feedback on Draft Amendment Directions on ‘Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks’.
Background and Objective
Currently, Commercial Banks (excluding Regional Rural Banks and Local Area Banks) may reckon the profits in current financial year for CRAR calculation on a quarterly basis provided the incremental provisions made for non-performing assets (NPAs) at the end of the any of the four quarters of the previous financial year have not deviated more than 25 per cent from the average of the four quarters. Based on a review, it has been decided to do away with this qualifying condition of incremental provisions for NPAs. Accordingly, RBI has proposed revisions in the matter. As announced in the Statement on Developmental and Regulatory Policies dated April 08, 2026, the draft Directions in this regard are being issued for public consultation.
(Brij Raj)
Chief General Manager
Press Release: 2026-2027/45 | |
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