RBI Leverage Ratio Directions: Basel 2017 Standard from April 2027
Why in the news
On 23 October 2026 the Reserve Bank of India issued final directions that bring the Basel Committee’s Leverage Ratio 2017 Standard into Indian banking rules. They take effect on 1 April 2027.
Key facts
- Instrument: RBI (Commercial Banks – Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, circular RBI/2026-27/297.
- Legal basis: Section 35A of the Banking Regulation Act, 1949.
- Draft and consultation: the draft was released on 7 August 2026 and comments were accepted until 28 August 2026. The final text includes changes made after reviewing the feedback.
- Banks must meet the minimum at all times, not only on reporting dates.
- The exposure measure adds up on-balance sheet items, derivatives, securities financing transactions (SFTs) and off-balance sheet items.
- A new method based on SA-CCR (Standardised Approach for counterparty credit risk) is added for derivative exposures.
- Banks must disclose the ratio publicly every quarter, on both a standalone and a consolidated basis.
| Bank category | Minimum leverage ratio |
|---|---|
| Domestic systemically important banks (D-SIBs) | 4% |
| Other banks | 3.5% |
| Indian branches of G-SIBs | 3.5% plus the G-SIB leverage ratio buffer |
About the leverage ratio
The leverage ratio compares a bank’s Tier 1 capital with its total exposure, without applying risk weights. It acts as a simple backstop to the risk-based capital ratios. These directions amend Chapter VII of the Capital Adequacy Directions, 2025. Both the capital and the exposure measures are calculated at quarter-end.
Exam angle
- Effective date: 1 April 2027. Minimums: D-SIBs 4%, other banks 3.5%.
- The standard is set by the Basel Committee on Banking Supervision (BCBS), and this version dates from 2017.
- Remember that RBI issues such directions under Section 35A of the BR Act, 1949.