Small Finance Banks Capital Adequacy Amendment Directions
Summary
The Reserve Bank of India issued revised Second Amendment Directions to the Small Finance Banks Prudential Norms on Capital Adequacy, modifying paragraph 74(6) regarding irrevocable payment commitments issued by banks to clearing corporations on behalf of clients. The amendment clarifies that while such commitments carry a 100% Credit Conversion Factor (CCF) as financial guarantees, capital must only be maintained on the portion reckoned as Capital Market Exposure (CME) with a 125% risk weight. The directions supersede the previous February 13, 2026 amendment.
What changed
The RBI amended Chapter IV - Risk Weighted Assets of the Small Finance Banks Capital Adequacy Directions by modifying paragraph 74(6). The change addresses irrevocable payment commitments issued by banks to clearing corporations of stock exchanges on behalf of clients. Previously treated as straightforward financial guarantees, the revised provision now clarifies that while the CCF remains 100%, capital adequacy requirements apply only to the portion classified as Capital Market Exposure under the Concentration Risk Management Directions, with a 125% risk weight applied to CME amounts.
Small Finance Banks must implement these revised provisions from whichever date is earlier: when they decide to implement the related Credit Facilities Amendment Directions (also dated March 30, 2026), or July 1, 2026. Banks should review their irrevocable payment commitment portfolios, ensure systems can calculate CME portions separately, and align implementation with the related Credit Facilities Amendment Directions. This revision supersedes the February 13, 2026 version of these directions.
What to do next
- Review irrevocable payment commitment portfolios and identify amounts qualifying as Capital Market Exposure
- Update capital calculation systems to apply 125% risk weight only to CME portions rather than full commitment amounts
- Align implementation timing with Credit Facilities Amendment Directions or default to July 1, 2026 deadline
Archived snapshot
Mar 31, 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.
Notifications
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| Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 (Revised) | |
| | RBI/2025-26/261
DOR.CRE.REC.453/21-01-002/2025-26
March 30, 2026
Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 (Revised)
Please refer to the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred to as ‘the Directions’).
On a review, consequent to the issuance of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 (Revised) dated March 30, 2026 and in exercise of the powers conferred by the section 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) 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 (Revised) hereinafter specified.
The Amendment Directions (Revised) modify paragraph 74(6) in ‘Chapter IV - Risk weighted assets (RWAs)’ of the Directions as under:
“Issue of irrevocable payment commitment by a bank to clearing corporations of stock exchanges on behalf of its client is a financial guarantee with a CCF of 100 per cent. However, capital shall be maintained only on the exposure reckoned as capital market exposure (CME) in terms of the Reserve Bank of India (Small Finance Banks - Concentration Risk Management) Directions, 2025. Thus, capital is to be maintained on the amount taken for CME and the risk weight shall be 125 per cent thereon.”
- The above revised amendment shall come into force from the date a bank decides to implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 - (Revised) dated March 30, 2026 or from July 1, 2026, whichever is earlier, and shall supersede the Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 dated February 13, 2026.
(Vaibhav Chaturvedi)
Chief General Manager | | RBI/2025-26/261
DOR.CRE.REC.453/21-01-002/2025-26
March 30, 2026
Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 (Revised)
Please refer to the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred to as ‘the Directions’).
On a review, consequent to the issuance of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 (Revised) dated March 30, 2026 and in exercise of the powers conferred by the section 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) 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 (Revised) hereinafter specified.
The Amendment Directions (Revised) modify paragraph 74(6) in ‘Chapter IV - Risk weighted assets (RWAs)’ of the Directions as under:
“Issue of irrevocable payment commitment by a bank to clearing corporations of stock exchanges on behalf of its client is a financial guarantee with a CCF of 100 per cent. However, capital shall be maintained only on the exposure reckoned as capital market exposure (CME) in terms of the Reserve Bank of India (Small Finance Banks - Concentration Risk Management) Directions, 2025. Thus, capital is to be maintained on the amount taken for CME and the risk weight shall be 125 per cent thereon.”
- The above revised amendment shall come into force from the date a bank decides to implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 - (Revised) dated March 30, 2026 or from July 1, 2026, whichever is earlier, and shall supersede the Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 dated February 13, 2026.
(Vaibhav Chaturvedi)
Chief General Manager |
| RBI/2025-26/261
DOR.CRE.REC.453/21-01-002/2025-26
March 30, 2026
Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 (Revised)
Please refer to the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred to as ‘the Directions’).
On a review, consequent to the issuance of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 (Revised) dated March 30, 2026 and in exercise of the powers conferred by the section 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) 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 (Revised) hereinafter specified.
The Amendment Directions (Revised) modify paragraph 74(6) in ‘Chapter IV - Risk weighted assets (RWAs)’ of the Directions as under:
“Issue of irrevocable payment commitment by a bank to clearing corporations of stock exchanges on behalf of its client is a financial guarantee with a CCF of 100 per cent. However, capital shall be maintained only on the exposure reckoned as capital market exposure (CME) in terms of the Reserve Bank of India (Small Finance Banks - Concentration Risk Management) Directions, 2025. Thus, capital is to be maintained on the amount taken for CME and the risk weight shall be 125 per cent thereon.”
- The above revised amendment shall come into force from the date a bank decides to implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 - (Revised) dated March 30, 2026 or from July 1, 2026, whichever is earlier, and shall supersede the Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 dated February 13, 2026.
(Vaibhav Chaturvedi)
Chief General Manager | |
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