RBI finalizes implementation of Basel’s Leverage Ratio 2017 Standard after reviewing stakeholder feedback on the draft directions issued in August 2026.
RBI Finalizes Leverage Ratio Framework for Banks
The Reserve Bank of India (RBI) has issued final guidelines on the implementation of the 'Leverage Ratio 2017 Standard' developed by the Basel Committee on Banking Supervision. This follows the issuance of draft directions on August 7, 2026, and public consultation. Feedback from stakeholders has been reviewed and incorporated into the final framework.
The Leverage Ratio 2017 Standard enhances bank resilience by setting a non-risk-based capital buffer. It is calculated as Tier 1 capital divided by total exposure (on- and off-balance sheet), aiming to limit excessive leverage. The ratio acts as a backstop to risk-weighted capital requirements and is critical in stress scenarios.
Legal and compliance teams in commercial banks must ensure systems and reporting align with updated definitions of exposure measures and off-balance sheet items. The revised norms will influence capital planning, internal risk assessment, and regulatory reporting under the RBI’s prudential framework.
