RBI issued Eleventh Amendment Directions, 2026, updating leverage ratio framework for commercial banks to align with Basel III 'leverage ratio 2017 standard'. The change affects capital adequacy reporting and liquidity management.
RBI Updates Leverage Ratio Framework for Banks
The Reserve Bank of India, on October 23, 2026, notified the Eleventh Amendment Directions, 2026, amending Chapter VII of the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025. The update aligns India’s leverage ratio framework with the Basel III 'leverage ratio 2017 standard'.
The revised norm introduces a revised exposure measure that includes off-balance sheet commitments, derivatives, and repo transactions under the leverage ratio denominator. The minimum leverage ratio remains at 4%, but with stricter calibration for systemically important banks. Banks must now report quarterly leverage ratios to RBI with greater granularity, including exposure by counterparty category.
Legal advisors must assist banks in updating internal capital adequacy assessment processes (ICAAP) and regulatory reporting templates. The amendment enhances transparency and reduces regulatory arbitrage, reinforcing financial stability in the banking sector.
