RBI Revises Leverage Ratio Requirements for Banks in India
RBI revised regulation on the implementation of leverage ratio for banks in India, under the Basel III capital regulations. RBI has decided that the minimum leverage ratio shall be 4% for domestic systemically important banks (D-SIBs) and 3.5% for other banks. These guidelines shall be effective from the quarter commencing October 01, 2019.
The leverage ratio is calibrated to act as a credible supplementary measure to the risk-based capital requirements and is intended to constrain the build-up of leverage in the banking sector to avoid destabilizing deleveraging processes, which can damage the broader financial system and the economy. The leverage ratio is also intended to reinforce the risk-based requirements with a simple, non-risk based “backstop” measure. The capital measure used for the leverage ratio at a point in time is the tier 1 capital measure applying at that time under the risk-based framework. The exposure measure for the leverage ratio should generally follow the accounting value and amounts to the sum of on-balance sheet exposures, derivative exposures, securities financing transaction exposures, and off- balance sheet items. Both the capital measure and the exposure measure, along with the leverage ratio, are to be disclosed on a quarter-end basis. However, banks must meet the minimum leverage ratio requirement at all times.
Effective Date: Quarter Commencing October 01, 2019
Keywords: Asia Pacific, India, Banking, Basel III, Leverage Ratio, Regulatory Capital, D-SIBs, Systemic Risk, RBI
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
IA of Hong Kong Publishes Cyber-Security Guideline for InsurersRelated Articles
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
HKMA Announces Repayment Deferment Under Payment Holiday Scheme
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
MAS Announces Key Initiatives to Support Adoption of SORA
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
PRA to Extend Temporary High Balance Coverage Amid COVID Crisis
PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.
EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC
EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.
EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10
EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.
EC Sets Out Updated Technical Information for Solvency II Calculations
EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.
