**Executive Summary**
The Reserve Bank of India issues the Second Amendment Directions, 2026, to the "Small Finance Banks - Prudential Norms on Capital Adequacy" Directions, 2025. These amendments, issued on February 13, 2026, modify the risk-weighted assets (RWAs) section regarding irrevocable payment commitments to clearing corporations. The effective date of the amendment will be the date a bank decides to implement the provisions of the "Small Finance Banks – Credit Facilities) Amendment Directions, 2026 or April 1, 2026, whichever is earlier.
**Key Points / Main Content**
* **Amendment Overview**:
* Modifies paragraph 74(6) in ‘Chapter IV - Risk-weighted assets (RWAs)' of the Directions.
* Pertains to irrevocable payment commitments by a bank to clearing corporations of stock exchanges on behalf of its client.
* **Capital Adequacy for Financial Guarantees**:
* Issue of irrevocable payment commitment by a bank to clearing corporations of stock exchanges on behalf of its client is a financial guarantee with a CCF of 100 per cent.
* Capital should only be maintained on the exposure reckoned as capital market exposure (CME) in terms of paragraph of the Reserve Bank of India (Small Finance Banks Concentration Risk Management) Directions, 2025.
* **Risk Weight**:
* Capital to be maintained on the amount taken for CME.
* Risk weight shall be 125 per cent thereon.
* **Effective Date**:
* Amendment comes into force from the date a bank decides to implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 or from April 1, 2026, whichever is earlier.
**Impact Analysis**
**Small Finance Banks**
* **Impact**
* Need to comply with the revised norms for capital adequacy related to financial guarantees.
* Impacted by the changes to the risk weighting of assets, specifically for capital market exposures (CME).
* **Action Required**
* Implement the amendment based on either their decision to implement the provisions of the "Small Finance Banks – Credit Facilities) Amendment Directions, 2026 or by April 1, 2026, whichever is earlier.
* Adjust capital calculations and risk assessments to reflect the new 125% risk weight for CME.
**Clearing Corporations**
* **Impact**
* Subject to the changes in the exposure and risk weights for banks’ commitments.
* **Action Required**
* Understand the revised capital requirements for banks issuing guarantees on their behalf.
* Ensure compliance with the amended directions related to exposures and risk weights.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026: The primary subject of the document outlining amendments to prudential norms for small finance banks' capital adequacy.
Banking Regulation Act, 1949: Indian legislation that empowers the Reserve Bank of India to regulate, control, and supervise banking companies in India.
Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025: Original policy document being amended.
Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026: Amendment directions impacting credit facilities for Small Finance Banks
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
_________________________ ______________________
www.rbi.org.in
RBI/2025-26/218
DOR.CRE.REC.409/21-01-002/2025-26 February 13, 2026
Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital
Adequacy) Second Amendment Directions, 2026
Please refer to the Reserve Bank of India (Small Finance Banks – Prudential Norms
on Capital Adequacy) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review, consequent to the issuance of the Reserve Bank of India (Small
Finance Banks – Credit Facilities) Amendment Directions, 2026 and in exercise of
the powers conferred by the section 21 and 35A of the Banking Regulation Act,
1949 and all other laws enabling the Reserve Bank of India (hereinafter called the
Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary
and expedient in the public interest so to do, hereby issues the Amendment
Directions hereinafter specified.
3. The Amendment Directions modify paragraph 74(6) in ‘Chapter IV - Risk weighted
assets (RWAs)’ of the Directions as under:
“Issue of irrevocable payment commitment by a bank to clearing corporations
of stock exchanges on behalf of its client is a financial guarantee with a CCF
of 100 per cent. However, capital shall be maintained only on the exposure
reckoned as capital market exposure (CME) in terms of paragraph of the
Reserve Bank of India (Small Finance Banks - Concentration Risk
Management) Directions, 2025. Thus, capital is to be maintained on the
amount taken for CME and the risk weight shall be 125 per cent thereon.”
4. The above amendment shall come into force from the date a bank decides to
implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit
Facilities) Amendment Directions, 2026 or from April 1, 2026, whichever is earlier.
(Vaibhav Chaturvedi)
विवियमि विभाग, केंद्रीय कायाालय, केंद्रीय कायाालय भिि, 12िी/ीं 13िी ींमींव़िल, शहीद भगत व ींह मागा, फोर्ा, म ींबई - 400001
र्ेलीफोि/ Tel No: 22661602, 22601000 फैक्स/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001
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