The Reserve Bank of India (Payments Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 issued by the Reserve Bank of India amend the prudential norms governing inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for Capital to Risk Weighted Assets Ratio (CRAR) computation by Payments Banks. Under the revised framework, Payments Banks may recognise profits of the current financial year on a quarterly basis for CRAR purposes, subject to the condition that quarterly financial statements are audited or subjected to
limited review. The eligible profit for inclusion in CET1 capital is to be computed using a prescribed formula that adjusts net profit by deducting a proportionate amount based on the average dividend paid during the previous three financial years. The Directions further clarify that cumulative net losses up to the relevant quarter end shall be fully deducted while calculating CET1 capital. The amendment has come into force with immediate effect.
