RBI’s Eleventh Amendment to Capital Adequacy Directions adopts updated leverage ratio standards, enhancing bank resilience in line with global norms.
RBI Aligns Leverage Ratio Framework with Global Standards
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. The amendment updates Chapter VII of the 2025 Directions to incorporate the revised leverage ratio framework, known as the 'leverage ratio 2017 standard', ensuring alignment with international best practices under the Basel Committee on Banking Supervision.
The revised framework strengthens the minimum leverage ratio requirement, defined as Tier 1 capital to total exposure, to improve resilience against systemic shocks. The amendment mandates enhanced disclosures and stricter measurement of off-balance sheet exposures. It applies to all commercial banks, with compliance deadlines set in phases, depending on size and complexity.
This regulatory update reflects India's continued integration into global financial standards. Banks must revise internal risk models and reporting mechanisms to reflect the new requirements. Supervision will be intensified by the Department of Supervision (DoS) to ensure adherence.
Citations
- RBI (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025, Chapter VII
