RBI amends leverage ratio framework to align with Basel 2017 standard

Points to Remember

• Minimum leverage ratio: 4% for D-SIBs, 3.5% for other banks; G-SIB branches maintain 3.5% plus applicable leverage ratio buffer.
• Capital measure and exposure measure computed on quarter-end basis; more frequent computation allowed with RBI approval if consistent.
• Banks must meet the minimum leverage ratio at all times.
• G-SIB branches breaching buffer requirements face minimum capital conservation ratios of 100%, 80%, 60%, 40% or 0% of earnings by bucket.
• Issued under Section 35A of the Banking Regulation Act, 1949.

Why it matters

Leverage ratio compliance now carries explicit buffer and earnings-retention consequences, so banks should verify capital planning against these dated thresholds.