RBI Update - Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026

The Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Fifth Amendment Directions,2026 issued by the Reserve Bank of India amend the existing capital adequacy framework for commercial banks by revising the norms relating to inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for CRAR computation. Under the revised framework, banks may recognise profits of the current financial year on a quarterly basis, provided that the financial statements are audited or subjected to limited review every quarter. The eligible profit for inclusion in CET1 capital is to be determined using a prescribed formula that adjusts net profit by deducting a proportionate amount linked to the average dividend paid during the previous three financial years. The amendment further clarifies that any cumulative net loss up to the relevant quarter end must be fully deducted while computing CET1 capital. The Directions have come into force with immediate effect.