RBI has invited comments on the draft changes to capital adequacy norms
In a move to align leverage ratio rules in the Indian banking regulatory framework with global standards, the RBI has issued a new draft. The proposed amendment updates Chapter VII of the 2025 capital adequacy framework for commercial banks, and feedback is sought until August 28, 2026.
Highlights
- RBI has issued the draft 'Commercial Banks, Prudential Norms on Capital Adequacy' Eleventh Amendment Directions, 2026, proposing amendments to leverage ratio norms.
- The draft brings Indian banking capital regulation closer to international standards by implementing the 'Leverage Ratio 2017 Standard' of the Basel Committee on Banking Supervision.
- RBI has invited comments until August 28, 2026, giving banks an opportunity to assess the operational and capital impact of the proposed changes.
This article was translated from the original. Read the original version by our correspondent here.
Proposed Amendments to the Leverage Ratio Framework
According to the RBI press release, the central bank has released the draft Reserve Bank of India (Commercial Banks, Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, which proposes amendments to 'Chapter VII: Leverage Ratio framework' of the 2025 capital adequacy directions. This step aims to implement the latest 'Leverage Ratio 2017 Standard' issued by the Basel Committee on Banking Supervision.The draft indicates that the RBI wants to bring the regulatory capital framework for commercial banks closer to international prudential standards. The leverage ratio framework is considered a key regulatory tool to limit overall risk on banks’ balance sheets and to strengthen oversight of capital quality.
Potential Impact on Banks and the Sector
Comments and suggestions are invited until August 28, 2026. The RBI has stated that responses can be submitted via the link available in the 'Connect 2 Regulate' section of its website, or alternatively, by post to the departmental address or by email with the prescribed subject line.This consultation process gives banks, compliance teams, and risk management units an opportunity to assess the operational and capital impact of the proposed changes. If implemented, the draft could further align the capital regulation framework in the Indian banking sector with Basel standards.
Our previous report discussed the consultation initiated to strengthen the regulatory framework for Authorised Persons under the joint proposal of exchanges and SEBI, which noted that suggestions from market participants are invited until August 27, 2026, and the proposed changes aim to bring greater clarity to supervision, accountability, and member compliance frameworks in broking and exchange operations.
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