Backgrounder: Final Capital Adequacy Requirements Guideline (2027)

Overview

The Office of the Superintendent of Financial Institutions (OSFI) is finalizing targeted revisions to the Capital Adequacy Requirements (CAR) Guideline. The guideline sets out the minimum capital requirements for federally regulated deposit-taking institutions.

The final CAR Guideline (2027) incorporates feedback from OSFI's 90-day public consultation, launched on November 20, 2025. The revisions are intended to:

• improve the clarity of capital requirements
• enhance consistency in their application
• better align capital requirements with underlying risks
• reduce unnecessary regulatory burden in certain areas

Key revisions relate to credit risk, securitization, and market risk requirements.

OSFI is also introducing a streamlined application and approval process for small and medium-sized banks seeking approval to adopt the internal ratings-based approach to credit risk. OSFI also consolidated several implementation-related notes to improve usability and transparency.

Why it's important

The CAR Guideline supports the safety and stability of Canada's financial system by establishing risk-based capital requirements for federally regulated deposit-taking institutions. Effectively governed, well-capitalized, and liquid financial institutions remain resilient during periods of financial stress and are able to continue investing in households and businesses.

Several of the final changes, particularly those related to small and medium-sized enterprise lending, land acquisition, development and construction financing, securitization, and market risk, are expected to support increased lending to smaller corporates and those in the construction industry and reduce regulatory burden while maintaining OSFI's prudential objectives.

Next steps

The final CAR Guideline (2027) takes effect on November 1, 2026, for institutions with a fiscal year ending October 31, and on January 1, 2027, for institutions with a fiscal year ending December 31.