The Reserve Bank of India (RBI) issued the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, on 23 October 2026. The final directions amend Chapter VII of the 2025 capital adequacy directions to align India's leverage ratio framework with the Basel Committee on Banking Supervision's Leverage Ratio 2017 Standard. RBI had circulated draft amendments on 7 August 2026 and considered stakeholder feedback before issuing the final directions.
The Basel III leverage ratio measures a bank's capital measure against its exposure measure. Under the revised framework, domestic systemically important banks (D-SIBs) must maintain a minimum leverage ratio of 4%, while other banks must maintain at least 3.5%. A branch in India of a global systemically important bank (G-SIB) must maintain 3.5% plus the applicable G-SIB leverage ratio buffer, including any additional buffer imposed by its home regulator. Capital distribution constraints apply to G-SIB branches that fail the applicable buffer requirements.
The directions revise how banks measure on-balance-sheet assets, derivatives, securities financing transactions and off-balance-sheet commitments. They specify conditions for permitted netting, cash variation margin, treatment of unsettled trades and cash-pooling arrangements. For banks using the standardised approach for counterparty credit risk, the derivative exposure method includes replacement cost and potential future exposure, subject to the detailed regulatory formula and conditions.
Capital and exposure measures are ordinarily calculated at each quarter-end, while banks must meet minimum leverage ratio requirements at all times. The directions require public disclosure of the quarterly Basel III leverage ratio on both standalone and consolidated bases, quarterly reporting to RBI's Department of Supervision, and disclosures using revised Pillar 3 Templates LR1 and LR2.
The amendments take effect on 1 April 2027. Affected banks should assess capital adequacy models, derivatives and securities-financing exposure calculations, off-balance-sheet commitments, regulatory reporting and disclosure processes against the final text before implementation. This is a final regulatory amendment, not a consultation proposal.