The RBI’s Eleventh Amendment Directions, 2026 updates the leverage ratio framework for commercial banks to align with the Basel III (2017) leverage ratio standard, strengthening capital resilience.
RBI Updates Leverage Ratio Framework for Commercial Banks
The Reserve Bank of India, on October 23, 2026, issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, revising Chapter VII to align the domestic leverage ratio framework with the Basel Committee’s 2017 leverage ratio standard. The update enhances transparency and comparability of bank capital adequacy across jurisdictions.
The revised norms introduce more stringent exposure calculations, including off-balance sheet items and derivative contracts. The aim is to limit excessive leverage and strengthen financial stability. The directions are issued under Section 35A of the Banking Regulation Act, 1949, and apply to all commercial banks uniformly.
Implication for Practitioners: Legal and risk teams must re-evaluate capital reporting templates and stress-test models. Non-compliance could lead to supervisory action or restrictions on expansion. Institutions should monitor RBI’s guidance on transitional arrangements and disclosure requirements.
Citations
- Banking Regulation Act, 1949, Section 35A
