The Reserve Bank of India (RBI) issued amended directions easing norms for inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for calculation of Capital to Risk Weighted Assets Ratio (CRAR) by banks.
The revised norms apply to commercial banks, small finance banks and payments banks, and come into force with immediate effect.
Under the earlier framework, banks could include current year profits in CRAR calculations on a quarterly basis only if incremental provisions for non-performing assets (NPAs) in any quarter of the previous financial year did not deviate by more than 25 per cent from the annual average.
The RBI said, the amended directions remove this qualifying condition linked to NPA provisioning following a review and feedback received from stakeholders on draft norms issued on April 8, 2026.
As per the revised framework, banks can reckon quarterly profits for CET1 capital calculation provided their financial statements are audited or subjected to limited review every quarter.
The amount eligible for inclusion will be determined through a formula linked to net profit and average dividend payout during the last three financial years.
The central bank issued separate amendment directions for commercial banks, small finance banks and payments banks under powers conferred by the Banking Regulation Act, 1949.
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