The Reserve Bank of India has issued revised amendments to its Small Finance Banks prudential norms on capital adequacy, changing how capital is calculated for irrevocable payment commitments issued to clearing corporations of stock exchanges on behalf of clients. Under the revised treatment, these commitments are classified as financial guarantees with a 100 percent credit conversion factor, but regulatory capital is to be maintained only on the exposure recognised as capital market exposure under the Reserve Bank of India (Small Finance Banks - Concentration Risk Management) Directions, 2025, with a 125 percent risk weight applied to that amount. The revised amendment applies from the date a bank opts to implement the related Small Finance Banks credit facilities amendments or from 1 July 2026, whichever is earlier, and it supersedes the 13 February 2026 version of the second amendment directions.
Reserve Bank of India 2026-03-30
Reserve Bank of India revises Small Finance Banks capital adequacy treatment for irrevocable payment commitments to clearing corporations
The Reserve Bank of India has revised capital adequacy norms for Small Finance Banks, changing the treatment of irrevocable payment commitments to clearing corporations. These are now financial guarantees with a 100 percent credit conversion factor, but capital is required only on the portion classified as capital market exposure under the 2025 Concentration Risk Management Directions, with a 125 percent risk weight. The amendment applies from the earlier of a bank’s adoption of related credit facilities changes or 1 July 2026 and supersedes the 13 February 2026 second amendment directions.