RBI updates leverage ratio framework for banks

SENSEX 73,123.83

 -125.56

NIFTY 22,600.00

 -87.65

CRUDEOIL 9,790.00

+ 306.00

GOLD 142,075.00

 -1,234.00

SILVER 196,112.00

 -3,487.00

SENSEX 73,123.83

 -125.56

NIFTY 22,600.00

 -87.65

NIFTY 22,600.00

 -87.65

CRUDEOIL 9,790.00

+ 306.00

CRUDEOIL 9,790.00

+ 306.00

GOLD 142,075.00

 -1,234.00

'; } document.getElementById("lgdv").innerHTML = htmlElements; } function numberformat(i) { return Number(parseFloat(i).toFixed(2)).toLocaleString('en', { minimumFractionDigits: 2 }) } async function gatherResponse(response) { const { headers } = response; const contentType = headers.get('content-type') || ''; if (contentType.includes('application/json')) { return await response.json() } return response.text(); } function getWidth() { if (Math.max(document.body.scrollWidth,document.documentElement.scrollWidth,document.body.offsetWidth,document.documentElement.offsetWidth,document.documentElement.clientWidth) > 991) { document.getElementById("mob").style.display = "none"; document.getElementById("lgdv").style.display = "block"; } else { document.getElementById("mob").style.display = "block"; document.getElementById("lgdv").style.display = "none"; } } getWidth(); THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS.THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS.

Leverage ratio is defined as a bank’s capital measure (numerator) divided by its total exposure measure (denominator), expressed as a percentage. 

By BL Mumbai Bureau

Updated - October 23, 2026 at 09:28 PM. | Mumbai

Domestic systemically important banks (D-SIBs) and other domestic commercial banks must maintain a minimum leverage ratio of 4 per cent and 3.5 per cent, respectively, as per RBI’s updated leverage ratio framework. | Photo Credit: FRANCIS MASCARENHAS

Domestic systemically important banks (D-SIBs) and other domestic commercial banks must maintain a minimum leverage ratio of 4 per cent and 3.5 per cent, respectively, as per RBI’s updated leverage ratio framework.

The aforementioned reserve norms, prescribed in RBI (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, are aimed at ensuring alignment with the latest leverage ratio framework (‘leverage ratio 2017 standard’) issued by the Basel Committee on Banking Supervision.. They will take effect from April 01, 2027.

Leverage ratio is defined as a bank’s capital measure (numerator) divided by its total exposure measure (denominator), expressed as a percentage. 

A bank’s total leverage ratio exposure measure is the sum of the following exposures: (i) on-balance sheet exposures (excluding on-balance sheet derivative and Securities financing transactions/ SFT exposures); (ii) derivative exposures; (iii) SFT exposures; and (iv) off-balance sheet (OBS) items.

Indian branches of Global Systemically Important Banks (G-SIBs) must maintain a 3.5 per cent minimum leverage ratio plus an applicable G-SIB leverage ratio buffer prescribed by their home regulators, per the norms.

Further, the central bank has specified explicit capital distribution constraints for G-SIB branches that fail to meet their leverage ratio buffer requirements.

The capital distribution constraints imposed on the branch will depend on its common equity tier 1 (CET1) risk-based ratio and its leverage ratio.

The minimum capital conservation standards for the CET1 risk-based requirements and Tier 1 leverage ratio requirements of a G-SIB branch in the first bucket of the higher loss-absorbency requirements (that is where a 1 per cent risk-based G-SIB capital buffer applies).

For G-SIBs, the central bank has prescribed minimum capital conservation ratios (expressed as a percentage of earnings) ranging from 100 per cent for CET1 risk-based ratio and Tier 1 leverage ratio of 5.5 per cent–6.375 per cent and 3.5 per cent–3.625 per cent, respectively, to 0 per cent for CET1 risk-based ratio and Tier 1 leverage ratio greater than 9% and greater than 4 per cent, respectively.

Published on October 23, 2026

THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS.Sign into Unlock benefits!

• Access 10 free stories per month
• Get notified by email for early preview to new features, discounts & offers