The RBI has issued the Eleventh Amendment to its capital adequacy directions for commercial banks, aligning the leverage ratio framework with the 'Leverage Ratio 2017 Standard'.
RBI Updates Leverage Ratio for Banks
The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, effective October 23, 2026. The amendment updates Chapter VII on the Leverage Ratio framework to align with the Basel Committee’s 'Leverage Ratio 2017 Standard', enhancing resilience against systemic risk.
The changes aim to strengthen the capital structure of commercial banks by refining exposure measurements and incorporating off-balance-sheet items into leverage calculations. The update targets large banks with complex portfolios and international operations, ensuring greater transparency and reducing risk concentrations.
Banking and corporate law professionals must assess the implications for capital planning and regulatory reporting. The revised framework may necessitate recalibration of internal risk models and governance mechanisms. The amendment forms part of India’s ongoing alignment with global prudential standards, reinforcing financial stability objectives post-2023 regulatory reforms.
Citations
- Reserve Bank of India (Prudential Norms on Capital Adequacy) Directions, 2025, Chap. VII
