he Reserve Bank of India (RBI) has set the minimum leverage ratio at 3.5 percent for all Indian banks and 4 percent for systemically-important banks, to maintain financial stability in the country.
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The Reserve Bank of India (RBI) has set the minimum leverage ratio at 3.5 percent for all Indian banks and 4 percent for systemically-important banks, to maintain financial stability in the country.
RBI’s stipulation is higher than the minimum leverage ratio of 3 percent as prescribed by Basel Committee on Banking Supervision (BCBS).
“Keeping in mind financial stability and with a view to moving further towards harmonisation with Basel III standards, it has been decided that the minimum LR should be 4 percent for Domestic Systemically Important Banks (DSIBs) and 3.5 percent for other banks,” the RBI said in a statement on June 6.
The instructions on leverage ratio will be issued before the end of June 2019, the RBI said.
Banks will need to calculate both the capital measure and the exposure measure on a quarter-end basis. “However, banks may, subject to supervisory approval, use more frequent calculations (e.g., daily or monthly average) as long as they do so consistently,” the RBI said.First Published on Jun 6, 2019 11:51 am
