**Executive Summary**
This document, issued by the Reserve Bank of India on February 13, 2026, contains the Second Amendment Directions, 2026 regarding Prudential Norms on Capital Adequacy for Small Finance Banks. These directions modify the capital maintenance requirements for irrevocable payment commitments issued by banks to clearing corporations. The amendment will 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.
**Key Points / Main Content**
* **Amendment Overview:**
* The document amends the Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Directions, 2025 (referred to as 'the Directions').
* The amendment is issued following the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026.
* **Modification to Risk Weighted Assets (RWAs):**
* The amendment modifies paragraph 74(6) in ‘Chapter IV - Risk weighted assets (RWAs)' of the Directions.
* For irrevocable payment commitments issued by a bank to clearing corporations of stock exchanges on behalf of its client, capital shall be maintained only on the exposure reckoned as capital market exposure (CME).
* Capital is to be maintained on the amount taken for CME, and the risk weight shall be 125 percent.
* **Effective Date:**
* The 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**
* Small Finance Banks need to implement the modified capital maintenance requirements for irrevocable payment commitments to clearing corporations.
**Action Required**
* Small Finance Banks must assess the impact of the amendment and implement the modified requirements, ensuring compliance with the new regulations. They need to decide when to implement the provisions of the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026.
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 main subject of the document, introducing amendments related to capital adequacy for Small Finance Banks.
Banking Regulation Act, 1949: An Indian Act that empowers the Reserve Bank of India to regulate, control, and inspect banks in India.
Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026: Amendment directions related to credit facilities for Small Finance Banks, referenced as a consequence for the issuance of the current directions.
Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Directions, 2025: The document being amended by the current directions, providing the original framework for capital adequacy norms 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)
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