The RBI has updated rules on how banks calculate capital strength by changing what portion of quarterly profits can be included. The regulator removed a prior condition that linked this inclusion to NPA-linked bad loan provisions. Supporters say it improves capital reporting flexibility, while critics may ask how it affects risk discipline and transparency for lenders.
The RBI has issued the Commercial Banks Prudential Norms on Capital Adequacy Fifth Amendment Directions 2026, allowing banks to reckon profits from the current financial year for CRAR calculations on a quarterly basis. The move applies subject to specific conditions and a prescribed formula, potentially giving banks greater flexibility in meeting capital adequacy requirements.
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Bank of Baroda reported Q4 consolidated profit up 11.2% year on year to Rs 5,616 crore, powered by higher net interest income, solid loan growth, and better asset quality. Deposits and advances grew at double-digit rates. But non-interest income declined and the capital adequacy ratio weakened during the quarter.
Fitch Ratings says Indian banks are well placed to shift to the expected credit loss provisioning framework that begins April 1, 2027. Fitch expects sufficient capitalisation, though common equity tier 1 may dip slightly. Banks can use a four-year transition period as initial provisions run higher than forecast, which Fitch links to a positive outlook.
SEBI is planning a major overhaul of how brokers calculate variable net worth. The new risk-based approach aims to link capital adequacy to the actual risk of a broker’s operations and the size of its client base. The move could force brokers to rethink buffers and compliance strategies as regulators target more accurate capital coverage.
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