RBI Issues Draft On Owned Fund And Tier 1 Capital Norms

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  • Last Updated on 15 January, 2026

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RBI Tier 1 Capital NBFCs

PR No. 2025-2026/1911; dated: 13.01.2026

1. Introduction

Reserve Bank of India (RBI) has released draft amendment directions clarifying the computation of Owned Fund and Tier 1 Capital for Non-Banking Financial Companies (NBFCs) and Asset Reconstruction Companies (ARCs).

2. Objective Of The Draft Directions

The draft aims to bring greater clarity and uniformity in regulatory capital computation and its linkage with credit and investment concentration norms. It seeks to strengthen prudential regulation and ensure adequate capital buffers across NBFCs and ARCs.

3. Minimum Capital And Regulatory Requirements

The draft directions prescribe minimum capital requirements for NBFCs and lay down revised norms for determining regulatory capital. These provisions are intended to enhance financial resilience and risk absorption capacity within the NBFC sector.

4. Treatment Of Instruments And Deferred Taxes

RBI has specified the terms and conditions under which perpetual debt instruments will qualify for inclusion in Tier 1 capital. The draft also clarifies the treatment of deferred tax assets and deferred tax liabilities for the purpose of regulatory capital computation.

5. Conclusion

The draft amendment directions reflect RBI’s continued focus on strengthening the capital framework for NBFCs and ARCs. Once finalised, these norms are expected to improve transparency, consistency, and regulatory compliance across the sector.

Click Here To Read The Full Press Release

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied