RBI Clarifies Treatment of Quarterly Profits in NBFC Owned Fund

The Reserve Bank of India has issued the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026, amending the Master Direction dated November 28, 2025. The amendment clarifies the components considered in the computation of Owned Fund for NBFCs and comes into immediate effect.

Key Update:
Free reserves may include quarterly profits, provided:

• Quarterly financial statements are reviewed or audited by statutory auditors.
• Eligible profit is adjusted for the average dividend paid over the last three financial years, calculated as:

EPt = NPt − 0.25 × D × t

Where:

• EPt – Eligible profit up to quarter t
• NPt – Net profit up to quarter t
• D – Average dividend of the last three financial years

Any current-year losses must be fully deducted from Owned Fund.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13311

RBI Revises Tier 1 Capital Norms for NBFC Concentration Risk

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Second Amendment Directions, 2026, amending the Master Direction issued on November 28, 2025. The amendment revises how Tier 1 capital is defined and applied for compliance with NBFC credit and investment concentration limits.

Key updates include:

• Revised Definitions: The definitions of “Owned Fund” and “Tier 1 Capital” are aligned with those provided in Chapter II of the RBI (NBFC – Prudential Norms on Capital Adequacy) Directions, 2025.
• Auditor Certification Requirement: NBFCs must obtain an external auditor’s certificate confirming capital augmentation and submit it to the Department of Supervision, RBI before including the additional capital for concentration norm calculations.
• Determination of Tier 1 Capital: The Tier 1 capital used for compliance must be based on the latest available financial statements (audited or subject to limited review), as defined in the Capital Adequacy Directions.

The amendment comes into effect immediately.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13312

RBI Clarifies “Owned Fund” Calculation for Housing Finance Companies

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026, amending the Housing Finance Companies Master Directions, 2025 to clarify the components considered in the computation of Owned Fund for Housing Finance Companies (HFCs).

Under the revised definition, Owned Fund includes paid-up equity capital, compulsorily convertible preference shares, free reserves including quarterly profits, share premium balance, and capital reserves arising from asset sales. It excludes revaluation reserves and is reduced by accumulated losses, intangible assets, and deferred revenue expenditure.

Quarterly profits may be included only if financial statements are subject to limited review or audit by statutory auditors, with adjustments for the average dividend paid over the previous three years. Any losses in the current year must be fully deducted.

The amendment also clarifies that Right-of-Use (ROU) assets under Ind AS 116 – Leases need not be deducted from Owned Fund if the underlying leased asset is tangible.

The amendment comes into effect immediately.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13313

RBI Updates “Owned Fund” Calculation for Core Investment Companies

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Core Investment Companies) Amendment Directions, 2026, amending the Core Investment Companies Directions, 2025 to clarify the components considered in the calculation of Owned Funds.

Under the revised definition, Owned Funds include paid-up equity capital, compulsorily convertible preference shares, free reserves including quarterly profits, share premium balance, and capital reserves from asset sales. These are reduced by accumulated losses, intangible assets, and deferred revenue expenditure, while revaluation reserves are excluded.

Quarterly profits can be included only if financial statements are reviewed or audited by statutory auditors and adjusted for the average dividend paid over the previous three years. Any current-year losses must be fully deducted.

The amendment also clarifies that Right-of-Use (ROU) assets under Ind AS 116 – Leases are not required to be deducted from Owned Funds if the underlying leased asset is tangible.

The amendment takes effect immediately.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13314

RBI Clarifies Owned Fund and Tier 1 Capital Norms for Mortgage Guarantee Companies

The Reserve Bank of India has issued the Reserve Bank of India (Mortgage Guarantee Companies) Amendment Directions, 2026, amending the Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025 to clarify the computation of Owned Fund and the definition of Tier 1 Capital for compliance with credit and investment concentration norms. The amendments have been issued under Section 45JA of the Reserve Bank of India Act, 1934 and are effective immediately.

Key Changes

• Revised Definition of Owned Fund:
  Owned Fund includes paid-up equity capital, free reserves (including quarterly profits), contingency reserves, share premium, and capital reserves from asset sale surplus (excluding revaluation reserves), after deducting accumulated losses, intangible assets, and deferred revenue expenditure.
• Inclusion of Quarterly Profits:
  Quarterly profits may be included in Owned Fund if financial statements are reviewed or audited quarterly. Eligible profits are calculated after adjusting for the average dividend of the last three financial years, while any current-year losses must be fully deducted.
• ROU Asset Clarification:
  Right-of-Use assets under Ind AS 116 – Leases need not be deducted from Owned Fund if the leased asset is tangible.
• Tier 1 Capital for Concentration Norms:
  Tier 1 Capital for compliance with concentration limits will be determined based on the latest available audited or limited review financial statements, as defined in the Master Directions.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13315

RBI Clarifies Owned Fund Calculation for Asset Reconstruction Companies

The Reserve Bank of India has issued the Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026, amending the Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025 to clarify the computation of Owned Fund for Asset Reconstruction Companies (ARCs). The amendment has been issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and is effective immediately.

Key Update

• Free reserves (excluding revaluation reserves) may include quarterly profits while computing Owned Fund.
• Quarterly profits can be included only if financial statements are reviewed or audited quarterly by statutory auditors.
• Eligible profits must be adjusted for the average dividend paid in the last three financial years using a prescribed formula.
• Losses during the current financial year must be fully deducted from the Owned Fund.

The amendment clarifies the treatment of quarterly profits in the calculation of Owned Fund for ARCs.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13316

RBI Clarifies Tier 1 Capital Norms for Standalone Primary Dealers

The Reserve Bank of India has issued the Reserve Bank of India (Standalone Primary Dealers) Amendment Directions, 2026, amending the Reserve Bank of India (Standalone Primary Dealers) Directions, 2025 to clarify the computation of Tier 1 Capital and its use for exposure norms. The amendment has been issued under the Reserve Bank of India Act, 1934 and is effective immediately.

Key Changes

• Tier 1 Capital Definition: Includes paid-up capital, statutory reserves, and other disclosed free reserves, including quarterly profits.
• Quarterly Profit Inclusion: Allowed only if financial statements are quarterly reviewed or audited and adjusted for the average dividend of the last three financial years.
• Mandatory Deductions: Investments in subsidiaries, intangible assets, deferred tax assets, current-year losses, and carried-forward losses must be deducted from Tier 1 Capital.
• Exposure Norms: Tier 1 Capital for exposure limits will be based on the latest audited or limited-review financial statements.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13317

RBI Aligns Dividend Rules for Foreign Bank Subsidiaries in India

The Reserve Bank of India has issued the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Amendment Guidelines, 2026, amending the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025.

The amendment revises Paragraph 13 on ‘Declaration of Dividends’ to align dividend distribution rules for wholly owned subsidiaries (WOS) of foreign banks with the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2026.

Key Update

• A Wholly Owned Subsidiary (WOS) of a foreign bank incorporated in India may declare dividends in the same manner as domestic banks.
• Dividend declaration must comply with the criteria prescribed under the RBI’s prudential norms on declaration of dividends and remittance of profit.
• Dividends may be repatriated in accordance with the provisions of the Foreign Exchange Management Act, 1999 (FEMA).

The amendment will come into effect from Financial Year 2026–27.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13318

RBI Replaces 2025 Dividend Norms for Commercial Banks

The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividend and Remittance of Profit) Repeal Directions, 2026, repealing the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2025.

The 2025 Directions will be replaced by the Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividends and Remittance of Profit) Directions, 2026, effective from Financial Year 2026–27.

Actions, approvals, and proceedings initiated under the repealed Directions will continue to remain valid, and existing rights, obligations, liabilities, penalties, or legal proceedings will not be affected by the repeal.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13320

RBI Replaces 2025 Dividend Norms for Small Finance Banks

The Reserve Bank of India has issued the Reserve Bank of India (Small Finance Banks – Prudential Norms on Declaration of Dividends) Repeal Directions, 2026, repealing the Reserve Bank of India (Small Finance Banks – Prudential Norms on Declaration of Dividends) Directions, 2025.

Key Update

• The 2025 Directions governing dividend declaration by Small Finance Banks have been repealed with effect from Financial Year (FY) 2026–27.
• These will be replaced by the Reserve Bank of India (Small Finance Banks – Prudential Norms on Declaration of Dividends) Directions, 2026, issued on March 10, 2026, and effective from FY 2026–27.

Continuity of Existing Actions

Actions, approvals, and proceedings initiated under the repealed Directions will continue to remain valid. The repeal does not affect existing rights, obligations, liabilities, penalties, or ongoing investigations and legal proceedings initiated under the earlier Directions.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13322

RBI Replaces 2025 Dividend Norms for Payment Banks

The Reserve Bank of India has issued the Reserve Bank of India (Payment Banks – Prudential Norms on Declaration of Dividends) Repeal Directions, 2026, repealing the Reserve Bank of India (Payment Banks – Prudential Norms on Declaration of Dividends) Directions, 2025.

Key Update

• The 2025 Directions governing dividend declaration by Payment Banks have been repealed with effect from Financial Year (FY) 2026–27.
• These will be replaced by the Reserve Bank of India (Payment Banks – Prudential Norms on Declaration of Dividends) Directions, 2026, issued on March 10, 2026, and effective from FY 2026–27.

Continuity of Existing Actions

Actions, approvals, and proceedings initiated under the repealed Directions will continue to remain valid. Existing rights, obligations, liabilities, penalties, and ongoing investigations or legal proceedings under the earlier Directions remain unaffected by the repeal.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13323

RBI Replaces 2025 Dividend Norms for Local Area Banks

The Reserve Bank of India has issued the Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Repeal Directions, 2026, repealing the Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Directions, 2025.

Key Update

• The 2025 Directions governing dividend declaration by Local Area Banks have been repealed with effect from Financial Year (FY) 2026–27.
• These will be replaced by the Reserve Bank of India (Local Area Banks – Prudential Norms on Declaration of Dividends) Directions, 2026, issued on March 10, 2026, and effective from FY 2026–27.

Continuity of Existing Actions

Actions, approvals, and proceedings initiated under the repealed Directions will continue to remain valid. Existing rights, obligations, liabilities, penalties, and ongoing investigations or legal proceedings under the earlier Directions remain unaffected by the repeal.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13325

RBI Updates Capital Adequacy Norms on Counterparty Credit Risk

The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, amending the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 to clarify the treatment of Counterparty Credit Risk (CCR) and align the framework with international standards. The amendment has been issued under Section 35A of the Banking Regulation Act, 1949 and is effective immediately.

Key Updates

• Banks must include CCR exposures of all consolidated entities when computing capital requirements on a consolidated basis.
• Revised add-on factors have been introduced for market-related off-balance sheet items such as interest rate, exchange rate, equity, and commodity contracts.
• For certain contracts that reset periodically, residual maturity will be measured until the next reset date, with a minimum add-on factor of 0.50% for interest rate contracts exceeding one year.
• A 2% risk weight will apply to trade exposures of banks acting as clearing members to a Qualifying Central Counterparty (QCCP) for derivatives and securities financing transactions, subject to specified conditions.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13326Top of Form

RBI Updates Capital Adequacy Norms for Small Finance Banks

The Reserve Bank of India has issued the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, amending the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025 to clarify the treatment of Counterparty Credit Risk (CCR) and align the framework with international standards. The amendment has been issued under Section 35A of the Banking Regulation Act, 1949 and is effective immediately.

Key Changes

• Revised add-on factors for market-related off-balance sheet items such as interest rate, exchange rate, equity, and commodity contracts.
• Residual maturity clarification for certain contracts that reset periodically, with a minimum add-on factor of 0.50% for interest rate contracts exceeding one year.
• Add-on factors apply to all outstanding CCR exposures, including exposures from clearing member activities in derivatives segments.
• A 2% risk weight applies to trade exposures of banks acting as clearing members to a Qualifying Central Counterparty (QCCP), subject to specified conditions.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13329

RBI Updates Capital Adequacy Norms for Payments Banks

The Reserve Bank of India has issued the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026, amending the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Directions, 2025 to clarify the treatment of Counterparty Credit Risk (CCR) and align the framework with international standards. The amendment has been issued under Section 35A of the Banking Regulation Act, 1949 and is effective immediately.

Key Updates

• Revised Add-on Factors: Updated add-on factors have been prescribed for market-related off-balance sheet items related to exchange rate contracts and gold, based on contract maturity.
• Applicability to CCR Exposures: The prescribed add-on factors apply to all outstanding Counterparty Credit Risk exposures.
• Risk Weight for QCCP Exposure: A 2% risk weight applies to trade exposures of payments banks acting as clearing members to a Qualifying Central Counterparty (QCCP) for derivatives and securities financing transactions, subject to specified conditions.

Bottom of Form

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13330

RBI Revises Capital Adequacy Norms for AIFIs

The Reserve Bank of India has issued the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026, amending the Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Directions, 2025 to clarify the treatment of Counterparty Credit Risk (CCR) and align the framework with international standards.

Key Updates

• CCR exposures of all consolidated entities must be included while computing capital requirements.
• Revised add-on factors have been introduced for market-related off-balance sheet items.
• A 2% risk weight applies to trade exposures to Qualifying Central Counterparties (QCCPs) for derivatives and securities financing transactions, subject to specified conditions.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13331

RBI Notifies Updates to UNSC Taliban Sanctions List

The Reserve Bank of India has issued UAPA Update 02 of 2026 informing regulated entities about amendments to the UNSC 1988 (2011) Taliban Sanctions List, as communicated by the Ministry of External Affairs following a press release dated March 10, 2026 from the United Nations Security Council.

Key Points

• The UNSC has amended 22 entries in the Taliban Sanctions List.
• Regulated entities must ensure they do not maintain accounts linked to listed individuals or entities under Section 51A of the Unlawful Activities (Prevention) Act, 1967.
• Institutions must follow the procedures outlined in the RBI Know Your Customer (KYC) Directions, 2025 and forward any delisting requests to the Ministry of Home Affairs.

Regulated entities are advised to review the updated sanctions list and ensure compliance with the applicable requirements.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13332