RBI updates capital adequacy framework for commercial banks, aligning leverage ratio standards with international benchmarks.
RBI Aligns Leverage Ratio with Global Standards
The Reserve Bank of India, via the 'Eleventh Amendment Directions, 2026' dated October 23, 2026, has revised the leverage ratio framework under its Prudential Norms on Capital Adequacy for commercial banks. The amendment ensures alignment with the Basel Committee’s 'Leverage Ratio 2017 Standard', enhancing systemic resilience.
The update modifies Chapter VII of the RBI’s 2025 Directions, introducing refinements in exposure measurements and adjustments. The leverage ratio, a non-risk-based capital metric, is designed to limit excessive borrowing and improve transparency in bank balance sheets. These changes apply to all commercial banks and must be implemented as part of ongoing regulatory compliance.
Legal and compliance teams in banking institutions must review internal capital reporting systems and prepare for supervisory assessments. The amendment reflects India’s continued integration with global banking standards and may influence future stress-testing and risk management protocols.
Citations
- Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026
- Basel III Leverage Ratio Framework
