Reserve Bank of India Issues Sixth Amendment Directions, 2026 on Small Finance Banks' Prudential Capital Adequacy Norms

Key facts

• The Reserve Bank of India (RBI) issued the Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Sixth Amendment Directions, 2026 on October 7, 2026, under Section 35A of the Banking Regulation Act, 1949.
• The amendment amends paragraph 75(5)(i) of the RBI (Small Finance Banks - Prudential Norms on Capital Adequacy) Directions, 2025, replacing sub-paragraph (a) to align with international standards.
• A 2 per cent risk weight applies to a bank's trade exposure to a QCCP for OTC derivatives, exchange traded derivatives, and SFTs when the bank acts as a clearing member for its own purposes.
• The 2 per cent risk weight also applies where the clearing member bank offers clearing services to clients and is obligated to reimburse clients for losses if the QCCP defaults.
• The Amendment Directions come into effect from the date of issue.
• The notification was issued by Sunil T S Nair, Chief General Manager, with reference number RBI/2026-27/287, DOR.MRG.REC.No.243/00-00-001/2026-27.