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SFBs: New AT1 PDI Limit for Foreign Currency/Rupee Bonds Overseas

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2025-26/86 · issued 29 Sep 2025 · ~1 min read

Quick answerRBI has revised the eligible limit for Perpetual Debt Instruments (PDIs) in foreign currency or rupee-denominated bonds overseas for Small Finance Banks to 1.5% of Risk Weighted Assets, effective October 1, 2025.

What changed

RBI issued new directions superseding the October 4, 2021 circular on PDIs in Additional Tier 1 capital for Small Finance Banks. The revised limit for PDIs denominated in foreign currency or rupee-denominated bonds overseas is now set at 1.5% of Risk Weighted Assets, based on the latest audited or limited review financial statements.

What it means for you

Small Finance Banks can now include PDIs in foreign currency or rupee bonds overseas in AT1 capital up to 1.5% of RWAs, providing a clearer and potentially more accessible avenue for raising capital. This change may help SFBs diversify their capital sources and strengthen their capital adequacy under Basel III norms.

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

Review your current AT1 capital composition to ensure compliance with the new 1.5% of RWAs limit for foreign currency/rupee bond PDIs.
Update internal capital planning and reporting systems to reflect the revised limit effective October 1, 2025.
Assess the feasibility of issuing or restructuring PDIs in foreign currency or rupee bonds overseas to optimize capital structure.
Coordinate with treasury and risk teams to align with the latest audited or limited review financial statements for RWA calculations.

Who it affects

All Small Finance Banks, Treasury and capital management teams at SFBs, Risk and compliance departments at SFBs

❓ Common questions

Regulatory timeline

Stated effective date effective October 1, 2025
Decoded by BankPulse 2026-06-18 01:01 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST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 or rupee bonds overseas for SFBs?

The limit is 1.5% of Risk Weighted Assets, as per the latest available financial statements (audited or subjected to limited review).

When does this direction take effect?

The directions come into force from October 1, 2025.

Does this direction replace any previous circular?

Yes, it supersedes the circular dated October 4, 2021 (DOR.CAP.REC.No.56/21.06.201/2021-22) on the same subject.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #20: DOR.CAP.REC.No.54/21.01.002/2025-26 — "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/2025-26/86
 DOR.CAP.REC.No.54/21.01.002/2025-26
 September 29, 2025
 All Small Finance 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:
 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/2025-26/86 · 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=12905&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.