What changed
The RBI has amended the provision relating to inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital by a Payments Bank. The amendment modifies the Master Direction issued in 2025.
What it means for you
This change allows Payments Banks to include quarterly profits in CET1 capital, subject to conditions such as quarterly audits and a specified formula, which may improve their capital adequacy ratios.
What you must do
- Review and update your capital adequacy calculations to reflect the new provision.
- Ensure that your financial statements are audited or subjected to limited review on a quarterly basis.
- Calculate the eligible profit using the specified formula and deduct cumulative net losses from CET1 capital.
Who it affects
Payments Banks
What is the new provision for including quarterly profits in CET1 capital?
The new provision allows Payments Banks to include quarterly profits in CET1 capital, subject to conditions such as quarterly financial statement audits and use of a specified formula.
What is the effective date of the amendment?
The amendment comes into force with immediate effect.