meta_id 3139578

On May 8, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026, amending its Master Direction issued on November 28, 2025. The amendment modifies provisions relating to the inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for payments banks. Under the revised framework, payments banks may now reckon profits in the current financial year for capital adequacy ratio (CRAR) calculations on a quarterly basis, subject to specific conditions. Financial statements must be audited or subjected to limited review on a quarterly basis. The eligible profit calculation uses a formula that accounts for net profit up to each quarter, adjusted for average dividends paid during the preceding three financial years. Cumulative net losses up to quarter-end must be fully deducted when calculating CET1 capital for the relevant quarter. This amendment applies to all payments banks operating in India and affects their capital adequacy requirements under prudential norms. The modification enables more frequent profit recognition in capital calculations while maintaining safeguards through audit requirements and loss deduction provisions. The directions came into force with immediate effect on May 8, 2026, under the authority of Section 35A of the Banking Regulation Act, 1949. REFERENCES: Reserve Bank of India. (2026). Reserve Bank of India (Payments Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026. RBI/2026-27/81 DOR.CAP.REC.No.70/21.01.002/2026-27. Available at: https://www.rbi.org.in/