RBI revises AT1 PDI foreign currency limit to 1.5% of RWAs
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2025-26/85 · issued 29 Sep 2025 · ~2 min read
Quick answerRBI has increased the eligible limit for Perpetual Debt Instruments (PDIs) in foreign currency/rupee bonds overseas to 1.5% of Risk Weighted Assets (RWAs) for AT1 capital, effective October 1, 2025, superseding the earlier 2021 circular.
What changed
The RBI has revised the eligible limit for PDIs denominated in foreign currency or rupee-denominated bonds overseas that can be included in Additional Tier 1 (AT1) capital. The new limit is set at 1.5% of Risk Weighted Assets (RWAs), replacing the previous limit from the October 4, 2021 circular. This change takes effect from October 1, 2025.
What it means for you
Banks can now raise more AT1 capital through foreign currency or overseas rupee bonds, up to 1.5% of RWAs, potentially easing capital-raising constraints. This provides greater flexibility for banks to diversify their capital sources and manage foreign currency exposure. Lenders should reassess their capital planning strategies to leverage this increased headroom.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal capital adequacy policies to reflect the new 1.5% of RWAs limit for foreign currency/rupee-denominated PDIs.
Review current AT1 capital composition and identify opportunities to issue additional PDIs in foreign currency or overseas rupee bonds.
Ensure compliance with Basel III guidelines and reporting requirements for AT1 instruments under the revised limit.
Communicate the change to treasury and risk management teams for capital planning and funding strategies.
Who it affects
All Scheduled Commercial Banks (excluding Small Finance Banks, Payments Banks, and Regional Rural Banks), Treasury and capital management teams, Risk management departments
❓ Common questions
Regulatory timeline
Stated effective dateeffective October 1, 2025
Decoded by BankPulse2026-06-18 01:01 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new limit for PDIs in foreign currency/rupee bonds overseas?
The new limit is 1.5% of Risk Weighted Assets (RWAs) as per the latest audited or limited review financial statements, effective October 1, 2025.
Does this direction replace the earlier 2021 circular?
Yes, this direction supersedes the circular dated October 4, 2021 (DOR.CAP.REC.No.56/21.06.201/2021-22) on the same subject.
Which banks are covered under this direction?
All Scheduled Commercial Banks except Small Finance Banks, Payments Banks, and Regional Rural Banks are covered.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #21: DOR.CAP.REC.No.53/21.01.002/2025-26 — "Reserve Bank of India (Basel III Capital Regulations - Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – El”
📜 Read the original circular — full text as issued by RBI
RBI/2025-26/85
DOR.CAP.REC.No.53/21.01.002/2025-26
September 29, 2025
All Scheduled Commercial Banks
(Excluding Small Finance Banks, Payments Banks and Regional Rural Banks)
Reserve Bank of India (Basel III Capital Regulations - Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas) Directions, 2025
The Reserve Bank had issued a circular DOR.CAP.REC.No.56/21.06.201/2021-22 dated October 4, 2021 on “Basel III Capital Regulations - Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas” (hereinafter referred to as “the circular”). On a review, it has been decided to revise the existing eligible limit applicable to PDIs denominated in foreign currency/rupee denominated bonds overseas.
2. Accordingly, in exercise of the powers conferred by section 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest to do so, hereby issues the Directions hereinafter specified.
3. (i) These Directions shall be called the “Reserve Bank of India (Basel III Capital Regulations - Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas) Directions, 2025”.
(ii) These Directions shall come into force from October 01, 2025.
4. In supersession of the circular ibid, the revised limits applicable to PDIs denominated in foreign currency/rupee denominated bonds overseas shall be as under:
“Perpetual Debt Instruments (PDIs) issued in foreign currency/ rupee denominated bonds overseas shall be eligible for inclusion in Additional Tier 1 (AT1) capital up to a maximum amount of 1.5 per cent of Risk Weighted Assets (RWAs) as per the latest available financial statements (audited or subjected to limited review).”
5. The circular DOR.CAP.REC.No.56/21.06.201/2021-22 dated October 4, 2021 on “Basel III Capital Regulations - Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas” shall stand repealed.
(Usha Janakiraman)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/85 · issued 29 Sep 2025. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12904&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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