RBI Proposes New Leverage Buffer for G-SIB Bank Branches in India
By ThePip Desk
RBI introduces new capital adequacy norms, including a leverage ratio buffer, for Indian branches of Global Systemically Important Banks (G-SIBs) to align with Basel standards.
The Reserve Bank of India (RBI) has put forth new capital adequacy norms, which include an additional leverage ratio buffer, specifically for the Indian branches of global systemically important banks (G-SIBs).
This initiative aims to bring domestic regulations into line with the latest Basel standards, particularly the ‘Leverage Ratio 2017 Standard’, ensuring greater financial stability across the banking sector.
Understanding the New Leverage Requirements
Under these draft directions, G-SIB branches operating in India will be mandated to uphold a specific minimum leverage ratio. This requirement includes an additional buffer determined by their parent global bank’s home regulator.
- G-SIB branches in India must maintain a minimum leverage ratio of 3.5 percent, alongside any additional buffer.
- For domestic systemically important banks (D-SIBs), the RBI has retained a 4 percent minimum leverage ratio.
- Other banks in India will continue to adhere to a 3.5 percent minimum leverage ratio.
Additional Measures and Timeline
The proposals also introduce restrictions on capital distributions for G-SIB branches if they fail to meet the stipulated leverage ratio buffer. Furthermore, the calculation methodologies for overall leverage exposure, encompassing various financial instruments, have been revised.
These amendments are slated to become effective from April 1, 2027. The RBI has opened the draft directions for public feedback, inviting comments until August 28, 2026.