Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (Updated as on May 15, 2026)
UR
- Applies toRural co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Last amendedJun 24, 2026 · 1 incorporated
- Length44 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
Kept in your browser only. Your desk
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Chapter I. Preliminary
1. Capital rules for RCBs
This document sets how much capital the lender must hold.
2. In force at once
The rules took effect the day they were issued. There was no grace period.
3. Who is covered
These Directions apply to every rural co-operative bank.
Chapter II. Regulatory Capital
Do it
1. Nine per cent floor
A rural co-operative bank must hold nine per cent capital at all times.
2. Capital has two tiers
Capital for this purpose is Tier 1 and Tier 2 only. Nothing else counts.
3. Risk assets are computed
Risk weighted assets are worked out under the paragraph named in the rule.
4. Revaluation reserve rule
A revaluation reserve rejected from Tier 1 is rejected from Tier 2 as well.
5. Bad debt reserve line
Appropriations to the bad and doubtful debt reserve come below the line.
6. Two tests for a fund
A fund enters Tier 1 only if it is an appropriation of profit and free.
7. Old perpetual debt counts
Innovative perpetual debt already issued still counts within the set ceilings.
8. Intangibles come off
Intangible assets, current losses and shortfalls in provisions are deducted.
9. Fund units are deducted
A holding in subordinated units of an alternative investment fund is deducted in full.
BankPulse example. A lender puts ₹10 crore into such a fund, as subordinated units. The whole ₹10 crore comes off capital funds. It is taken proportionately from Tier 1 and Tier 2 capital.
10. Guarantee money is deducted
A default loss guarantee given by the lender is taken out of its capital.
BankPulse example. A lender gives a default loss guarantee and ₹20 crore of it is still outstanding. The whole ₹20 crore comes off its capital. Nothing is left in on the ground that no loss has happened yet.
11. Apply through Pravaah
The application and offer document go to the Reserve Bank through the Pravaah portal.
12. Accountant must certify
A chartered accountant must certify that the offer document follows these rules.
13. Perpetual paper capped
Perpetual preference shares and debt together cannot exceed 35 per cent of Tier 1.
14. Board fixes the amount
The Board itself decides how much of the instrument may be raised.
15. No put or step up
These instruments cannot carry a put option or a step up option.
16. Shown as capital
These instruments appear in the balance sheet under capital.
17. Missed dividend is lost
A dividend missed in a year is never paid in a later year, whatever the profit.
18. Short payment not made up
If less than the set rate is paid, the shortfall is never made good.
19. Where the holder ranks
These holders rank above equity but below every creditor and depositor.
20. No voting rights
An investor in these preference shares gets no vote.
21. No progressive discount
These instruments are not written down as they age.
22. Fully paid and unsecured
The instrument must be fully paid, unsecured and free of restrictive clauses.
23. Other regulators still apply
Conditions set by the market regulator or any other authority must also be met.
24. Conflict goes to RBI
Any clash with another regulator's terms must be reported to the Reserve Bank.
25. Money before allotment
Money collected before allotment counts as a liability for reserve purposes.
26. No loan to buy them
No loan may be given to any person to buy this paper.
27. Not a lending security
The issuer cannot lend against the security of its own instrument.
28. Debt limb capped at fifteen
Perpetual debt counted in Tier 1 cannot exceed fifteen per cent of Tier 1.
29. Shown as borrowings
Perpetual debt is shown in the balance sheet as borrowings, not capital.
30. Report a lock in
Every use of the lock in clause must be reported to the regulator.
31. Holders rank together
Within the same class every investor ranks equally with the others.
32. General provisions capped
General provisions count as Tier 2 only up to 1.25 per cent of risk weighted assets.
33. Investment reserve counts
The investment fluctuation reserve may be included in Tier 2 capital.
34. Long deposits in Tier 2
Long term subordinated deposits already taken still count in Tier 2.
35. Tier 2 stays smaller
Tier 2 capital may never be larger than Tier 1 capital.
36. Coupon is interest
The coupon on these instruments is treated as interest in the accounts.
37. No coupon in a loss
The coupon cannot be paid if the bank is carrying a net loss.
38. Holder cannot force repayment
The investor cannot demand redemption of these shares.
Chapter V. Repeal provisions
1. Old rules stay repealed
Rules repealed before this document was issued remain repealed.
2. Past acts still stand
Anything done under the old rules is still judged by the old rules.
3. Added to other law
These rules sit on top of every other law and rule already in force.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Jun 24, 2026.
- start date. These amended capital rules will apply from April 1, 2027.
- market risk weight. Market risk on net open position must be given 100 per cent risk weight.
- capital for forex risk. The bank must hold capital for foreign exchange risk every day at close of business.
- exclude deducted positions. Do not apply foreign exchange risk capital to any position already deducted from regulatory capital, including its hedge.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for rural co-operative banks
RBI Kisan Credit Card rules for rural co-operative banks 2026
RBI credit bureau reporting rules for rural co-operative banks 2025
RBI customer service and fair conduct rules for rural co-operative banks 2025
RBI deposit interest rate rules for rural co-operative banks 2025
RBI digital banking channel rules for rural co-operative banks 2025
Every rule page on BankPulse · Questions bankers ask, answered