Quarterly Profits In CRAR For Banks Dispensed With; RBI Reviews matters to be placed before the Boards of the Banks
FinTech BizNews Service
Mumbai, April 8, 2026: The Monetary Policy Committee (MPC) held its 60th meeting from April 6 to 8, 2026, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. The MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta and Shri Indranil Bhattacharyya attended the meeting.
The RBI Governor Shri Sanjay Malhotra made a statement on Developmental and Regulatory Policies, on April 08, 2026. The Monetary Policy Committee (MPC) held its meeting from April 6 to 8, 2026, under the chairmanship of Shri Sanjay Malhotra.
This Statement sets out various developmental and regulatory policy measures relating to (i) Regulations; (ii) Supervision; (iii) Payment Systems; and (iv) Financial Markets:
I. Regulations
1. Review of guidelines for inclusion of Quarterly Profits in Capital to Riskweighted Assets Ratio (CRAR) computation – Commercial Banks
As per the extant guidelines, commercial banks (excluding Regional Rural Banks and Local Area Banks) are permitted to include quarterly net profits in the calculation of CRAR provided that the incremental provisions made for Non-Performing Assets (NPAs) at the end of any of the four quarters of the previous financial year, have not deviated more than 25 per cent of the average of the four quarters.
On a review, it is proposed to dispense with this condition. The draft amendment directions in this regard will be issued for public comments shortly.
2. Review of Guidelines on Investment Fluctuation Reserve (IFR)
Banks currently maintain Investment Fluctuation Reserve (IFR) as an additional buffer against depreciation in the value of their investments, subject to mark-to-market (MTM) requirements. Currently, commercial banks (including Local Area Banks, but excluding Small Finance Banks, Payment Banks and Regional Rural Banks) already maintain capital charge for market risk and also follow revised norms on classification, valuation, and operation of investment portfolio. In consideration of these applicable prudential requirements, it is proposed to dispense with the IFR requirement for such commercial banks. The existing guidelines for other bank categories are also being revised to address the operational challenges encountered by such banks in complying with the regulatory thresholds on IFR and to harmonise instructions across bank categories, thereby enhancing regulatory clarity and consistency. Draft directions in this regard will be issued shortly for public consultation.
3. Review of matters placed before the Boards of the Banks
The matters to be placed before the Boards of banks, along with their periodicity, are determined by the Boards themselves, guided by the seven broad themes prescribed by the Reserve Bank of India. Meanwhile, the Reserve Bank has also mandated certain policies and matters to be placed before the Board for approval, review, or information. In an endeavor to enable Boards to utilize its time effectively, and to facilitate a more focused and qualitative engagement on strategy and risk governance, the Reserve Bank has undertaken comprehensive review and rationalization of all such instructions. Draft directions in this regard will be issued shortly for public consultation.
II. Supervision
4. Consolidation of Supervisory Instructions
The Reserve Bank has constantly endeavored to refine and strengthen its regulatory and supervisory framework while minimising compliance costs, through periodic evaluation of instructions for their continued relevance. In furtherance of this objective, Reserve Bank had undertaken a comprehensive consolidation exercise of the regulatory instructions, on an ‘as is’ basis, in 2025. The exercise involved consolidation of more than 9000 existing regulatory circular/ guidelines into 238 function-wise Master Directions (MDs), specific to each category of regulated entity. A similar exercise has now been carried out for the supervisory instructions. Accordingly, the drafts of 64 Master Directions consolidating extant supervisory instructions on up to nine functional areas are being published today on RBI website for public comments.
