Reserve Bank of India (Local Area Banks - Prudential Norms on Capital Adequacy) Amendment Directions, 2026

RBI/2026-27/157
DOR.MRG.REC.No.143/21-01-002/2026-27

June 24, 2026

Reserve Bank of India (Local Area Banks - Prudential Norms on Capital Adequacy) Amendment Directions, 2026

Please refer to paragraph 29 of the Reserve Bank of India (Local Area Banks - Prudential Norms on Capital Adequacy) Directions, 2025 dated November 28, 2025 which inter alia specifies the requirement for maintenance of capital charge on foreign exchange risk. Upon a review and to ensure greater alignment with international standards and consistent implementation across Local Area Banks, there is a felt need to amend these instructions.

2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India (RBI) to issue instructions in this regard, the RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Amendment Directions hereinafter specified.

3. (i) These instructions shall be called the Reserve Bank of India (Local Area Banks - Prudential Norms on Capital Adequacy) Amendment Directions, 2026.

(ii) These Amendment Directions shall come into effect from April 1, 2027.

4. The Reserve Bank of India (Local Area Banks - Prudential Norms on Capital Adequacy) Directions, 2025 are amended as provided below.

(i) Paragraph 29 shall be substituted by the following, namely:–

“Measurement of capital charge for foreign exchange and gold open positions

29. An LAB shall compute capital charge for foreign exchange risk as per the following method.

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