Current · Source: Reserve Bank of India · RBI/2026-27/133 · issued 16 Jun 2026 · ~1 min read
Quick answerRBI amends capital adequacy norms for All India Financial Institutions, introducing zero risk weight for 75% of guaranteed portion of ECLGS 5.0 exposures.
The rule, in the simplest words
The RBI has changed the rules for how much capital [savings] banks need to have for certain loans, specifically those under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.
For 75% of the guaranteed part of these loans, banks don't need to set aside extra capital, which is called a 'zero risk weight'.
The remaining 25% of the guaranteed part will still need capital set aside, following the usual rules.
This change aims to help lenders by reducing the amount of capital they need to keep for these loans.
How it plays out — a real example
["A credit manager in Mumbai can now feel more confident when approving loans under ECLGS 5.0, knowing that 75% of the guaranteed portion won't require extra capital to be set aside. This might encourage the credit manager to approve more of these loans, helping small and medium-sized businesses in the area. As a result, the local economy could see an increase in available credit."]
What changed
The RBI has amended the prudential norms on capital adequacy for All India Financial Institutions. A new paragraph 29A has been inserted, which states that exposures guaranteed under ECLGS 5.0 will attract a risk weight of zero percent to the extent of 75% of the guaranteed portion. The remaining exposure will attract risk weight as per extant guidelines.
What it means for you
This amendment is expected to provide relief to lenders by reducing their capital requirements for ECLGS 5.0 exposures. It may also encourage lenders to extend more credit under the scheme, thereby supporting MSMEs and other eligible borrowers. The amendment may have a positive impact on the overall credit growth in the economy.
What you must do
Review your bank's exposure to ECLGS 5.0
Assess the impact of the amendment on your bank's capital requirements
Consider increasing lending under ECLGS 5.0
Who it affects
All India Financial Institutions, Lenders under ECLGS 5.0, MSMEs and other eligible borrowers
❓ Common questions
What is ECLGS 5.0?
ECLGS 5.0 is the Emergency Credit Line Guarantee Scheme introduced by the Government of India.
What is the risk weight for ECLGS 5.0 exposures?
Exposures guaranteed under ECLGS 5.0 will attract a risk weight of zero percent to the extent of 75% of the guaranteed portion.
📜 Read the original circular — full text as issued by RBI
RBI/2026-27/133
DOR.STR.REC.112/21-01-002/2026-27
June 16, 2026
Reserve Bank of India (All India Financial Institutions – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026
Please refer to Reserve Bank of India (All India Financial Institutions – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. Please refer to circular Ref no. 0264/NCGTC/ECLGS5.0 dated May 08, 2026, issued by National Credit Guarantee Trustee Company (NCGTC) in respect of Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, introduced by the Government of India.
3. In exercise of the powers conferred by Section 45 L of the Reserve Bank of India Act, 1934, and all other provisions / laws enabling the Reserve Bank of India in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.
4. These Amendment Directions shall amend the Directions as specified below:
(1) Paragraph 29A shall be inserted as below:
“Exposures guaranteed under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 shall attract risk weight of zero percent to the extent of 75% of the guaranteed portion, i.e., to the extent of guaranteed portion wherein the settlement amount is expected to be received within thirty days from the date of invocation. The remaining exposure shall attract risk weight as per the extant guidelines.”
5. The above amendment shall come into force with immediate effect.
(Vaibhav Chaturvedi)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2026-27/133 · issued 16 Jun 2026. The plain-English explanation above is BankPulse’s own independent summary.
Assess the impact of the amendment on your bank's capital requirements
📜 Compliance
Review your bank's exposure to ECLGS 5.0
Consider increasing lending under ECLGS 5.0
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All India Financial Institutions, Lenders under ECLGS 5.0, MSMEs and other eligible borrowers), your first concrete step on “RBI Amends Capital Adequacy Norms” is: “Review your bank's exposure to ECLGS 5.0” (RBI issued this 16 Jun 2026).
Circular: RBI/2026-27/133 -- RBI Amends Capital Adequacy Norms
Issued: 16 Jun 2026
Action required: Review your bank's exposure to ECLGS 5.0
Action required: Assess the impact of the amendment on your bank's capital requirements
Action required: Consider increasing lending under ECLGS 5.0
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 01 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=13504&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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