RBI’s Eleventh Amendment Directions, 2026, update leverage ratio framework for commercial banks to align with international standards.
RBI Updates Leverage Ratio Framework for Banks
The Reserve Bank of India issued the 'Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026' on October 23, 2026. The amendment revises Chapter VII – Leverage Ratio Framework – to align domestic norms with the 'Leverage Ratio 2017 Standard' as recommended by the Basel Committee on Banking Supervision.
The revised framework adjusts the exposure measure calculation to include off-balance-sheet items, derivative contracts, and certain securitisation exposures more comprehensively. It enhances transparency in capital adequacy reporting and strengthens resilience against systemic risk. Banks must implement the updated framework in their quarterly disclosures starting Q3 FY2026–27.
Legal teams advising commercial banks must ensure compliance with revised reporting formats under the Directions. Internal audit and risk departments should be engaged to validate exposure calculations. Non-compliance may trigger supervisory actions under Section 35 of the Banking Regulation Act, 1949. Lawyers should also monitor further RBI clarifications on transitional arrangements.
Citations
- Banking Regulation Act, 1949, Section 35
