Reserve Bank of India finalizes leverage ratio rules for banks effective April 2027
The RBI issued its final leverage-ratio guidelines, to be applied from 1 April 2027, after reviewing stakeholder feedback on the August draft.
The Reserve Bank of India released its definitive leverage-ratio regulations, slated to take effect on 1 April 2027, following a public comment period on the August draft. Domestic banks such as State Bank of India, HDFC Bank and ICICI Bank are required to maintain a minimum leverage ratio of 3.5%, and the same floor applies to branches of global systemically important banks, with an additional buffer. A proposal to align the G-SIB requirement with the Basel 3% floor was turned down.
The rules also impose capital-distribution constraints on G-SIB branches that fall short of the buffer, tying restrictions to their common-equity Tier 1 and leverage ratios. All on-balance-sheet assets, including derivatives collateral, are counted in the exposure measure, though temporary exemptions may be granted in exceptional macroeconomic conditions, with required disclosures.
Why it matters
The rules will shape Indian banks' capital structures and influence credit availability from 2027 onward.
How the sides frame it
MODERATE AGREEMENTCenter coverage neutrally reports the finalized rules and specific provisions, while right-leaning coverage highlights that the new rules raise leverage ratios and bring India into line with Basel guidance.
CENTER
Neutral reporting of the RBI's finalized leverage-ratio rules and their specific provisions.
RIGHT
Emphasizes that the RBI is raising leverage ratios and aligning standards with Basel guidance.
The right emphasises
- Domestic systemically important banks now need a 4% leverage ratio, others 3.5%
- The rules bring India’s standards into line with the Basel Committee’s 2017 guidance
- Specifies calculation of exposure for on-balance-sheet assets, derivatives, securities-financing and off-balance-sheet commitments
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