Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026 · 23 Oct 2026

RBI/2026-27/297 DOR.CAP.REC.251/21-02-002/2026-27 October 23, 2026

Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026

Please refer to 'Chapter VII: Leverage Ratio framework' of the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 (hereinafter referred to as 'the Directions'). To ensure alignment with the latest leverage ratio framework ('leverage ratio 2017 standard') issued by the Basel Committee on Banking Supervision, there is a felt need to amend these Directions.

2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India to issue instructions in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Amendment Directions hereinafter specified.

3. These instructions shall be called the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026.

4. These Amendment Directions modify the Directions as under:

4(1) Paragraph 262 shall be substituted with the following, namely:

"262. The definition, minimum requirement, and the scope of application of the leverage ratio shall be as under:

(1) The Basel III leverage ratio is defined as the capital measure (the numerator) divided by the exposure measure (the denominator), with this ratio expressed as a percentage:

(2) The minimum leverage ratio for a domestic systemically important bank (D-SIB) shall be 4 per cent and 3.5 per cent for other banks. Branch of a global systemically important bank (G-SIB) in India (hereinafter referred to as 'G-SIB branch') shall maintain a leverage ratio of 3.5 per cent plus the leverage ratio buffer applicable to it as a G-SIB (including any additional leverage ratio buffer prescribed by the home regulator).

(3) Capital distribution constraints will be imposed on a G-SIB branch which does not meet its leverage ratio buffer requirement. The capital distribution constraints imposed on the branch will depend on its common equity tier 1 (CET1) risk-based ratio and its leverage ratio as under:

• (i) A G-SIB branch which meets both its CET1 risk-based capital requirements (defined as a 5.5 per cent minimum requirement, a 2.5 per cent capital conservation buffer, the G-SIB higher loss-absorbency requirement, and countercyclical capital buffer, if applicable) and its Tier 1 leverage ratio requirement (defined as a 3.5 per cent leverage ratio minimum requirement and the G-SIB leverage ratio buffer) will not be subject to minimum capital conservation standards.
• (ii) A G-SIB branch which does not meet one of these requirements will be subject to the associated minimum capital conservation standards.
• (iii) A G-SIB branch which does not meet both requirements will be subject to the higher minimum capital conservation standard related to its risk-based capital requirement or leverage ratio.

(4) The table below shows 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 (i.e., where a 1 per cent risk-based G-SIB capital buffer applies):

(5) Both the capital measure and the exposure measure are to be calculated on a quarter-end basis. However, a bank may, subject to the Reserve Bank's approval, use more frequent calculations (e.g., daily or monthly averaging) as long as it does so consistently.

(6) A bank shall meet the minimum leverage ratio requirement at all times."

4(2) Sub-paragraph (1) of paragraph 263 shall be substituted with the following, namely:

"(1) The Basel III leverage ratio framework shall follow the same scope of regulatory consolidation, including consolidation criteria, as is used for the risk-based capital framework [refer to paragraph 8 of these Directions]."

4(3) For paragraphs 265 and 266, the following shall be substituted, namely:

"265. General measurement principle

(1) The leverage ratio exposure measure generally follows gross accounting values.

Note - If a long settlement transaction is classified as a derivative according to the applicable accounting standards, the Basel III leverage ratio exposure measure has to be calculated according to paragraph 267 / 267A on 'Derivative exposures'. Similarly, if a failed trade is classified as a receivable according to the applicable accounting standards, the exposure measure has to be calculated according to paragraph 266 on 'On-balance sheet exposures'. Securities financing transactions (SFTs) that have failed to settle are excluded from the described treatment and their exposure measure must be calculated according to paragraph 268 on 'Securities Financing Transaction (SFT) exposures'.

(2) Unless specified differently below, a bank shall not (i) take account of physical or financial collateral, guarantees or other credit risk mitigation techniques to reduce the leverage ratio exposure measure; and (ii) net assets and liabilities.

(3) Any item deducted from Tier 1 capital and regulatory adjustments other than those related to liabilities shall be deducted from the leverage ratio exposure measure. A non-exhaustive list of examples is provided below:

• (i) where a banking, financial or insurance entity is not included in the regulatory scope of consolidation, the amount of any investment in the capital of that entity that is totally or partially deducted from CET1 capital or from AT1 capital of the bank following the corresponding deduction approach in paragraph 28, shall also be deducted from the leverage ratio exposure measure;
• (ii) prudent valuation adjustments (PVAs) for exposures to less liquid positions, other than those related to liabilities, that are deducted from Tier 1 capital as per paragraph 213 of these Directions, shall be deducted from the leverage ratio exposure measure.

(4) Liability items shall not be deducted from the leverage ratio exposure measure. For example, gains / losses on fair valued liabilities or accounting value adjustments on derivative liabilities due to changes in the bank's own credit risk as described in paragraph 28(5) of these Directions shall not be deducted from the leverage ratio exposure measure.

(5) With regard to traditional securitisations, an originating bank may exclude securitised exposures from its leverage ratio exposure measure if the securitisation meets the operational requirements for the recognition of risk transference as described in paragraph 96 of these Directions. A bank meeting these conditions shall include any retained securitisation exposures in its leverage ratio exposure measure. In all other cases, for example traditional securitisations that do not meet the operational requirements for the recognition of risk transference or synthetic securitisations, the securitised exposures shall be included in the leverage ratio exposure measure.

(6) A bank shall be particularly vigilant to transactions and structures that have the result of inadequately capturing its sources of leverage. An illustrative list of examples of concerns that may arise in such leverage ratio exposure measure minimising transactions and structures includes:

• (i) SFTs where exposure to the counterparty increases as the counterparty's credit quality decreases or SFTs in which the credit quality of the counterparty is positively correlated with the value of the securities received in the transaction (i.e., the credit quality of the counterparty falls when the value of the securities falls);
• (ii) a bank that normally acts as principal but adopts an agency model to transact in derivatives and SFTs in order to benefit from the more favourable treatment permitted for agency transactions under the leverage ratio framework;
• (iii) collateral swap trades structured to mitigate inclusion in the leverage ratio exposure measure; or
• (iv) use of structures to move assets off the balance sheet.