RBI Revises Capital Adequacy Framework: Quarterly Profits Eligible for CET1 Recognition Across Banking Categories

RBI has amended the prudential capital adequacy frameworks applicable to Commercial Banks, Small Finance Banks (“SFBs”), and Payments Banks by revising the treatment of interim profits for Common Equity Tier 1 (“CET1”) capital and Capital to Risk-Weighted Assets Ratio (“CRAR”) calculations.⁷

Under the revised framework, eligible quarterly profits may be recognised as CET1 capital, provided the quarterly financial statements have been audited or subjected to a limited review and the profits are computed in accordance with RBI-prescribed methodologies. The framework also requires appropriate adjustments for historical dividend payout rates and mandates deduction of cumulative losses from CET1 capital.

The amendments seek to improve the accuracy, transparency, and reliability of regulatory capital calculations while ensuring that only prudently assessed profits are considered for capital adequacy purposes.

Conclusion

By permitting recognition of reviewed interim profits while maintaining prudential safeguards, RBI has strengthened the quality and reliability of regulatory capital across banking categories.

Last Updated on 24 June, 2026