Now Reading: RBI proposes Basel-aligned leverage ratio norms
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RBI proposes Basel-aligned leverage ratio norms
The Reserve Bank of India has proposed new leverage ratio requirements for banks, aligning with the Basel Committee on Banking Supervision's framework. Branches of globally systemically important banks (G-SIB) must maintain a…
The Story in Brief
The Reserve Bank of India has proposed new leverage ratio requirements for banks, aligning with the Basel Committee on Banking Supervision's framework. Branches of globally systemically important banks (G-SIB) must maintain a minimum 3.5% leverage ratio plus an applicable buffer. The three domestic systemically important lenders, SBI, HDFC Bank and ICICI Bank, will need to keep a 4% ratio. Other commercial banks will continue with the existing 3.5% requirement.
The draft rules, released on August 7, invite comments until August 28. Capital distribution constraints will apply to G-SIB branches that fail to meet the buffer requirement. The RBI may temporarily exempt banks' balances held with it from the leverage ratio measure in exceptional macroeconomic circumstances to aid monetary policy.
The Indian Opinion
The usual cries of overregulation will surface, but these norms are simply catching up with global standards. The 4% floor for SBI, HDFC and ICICI is already in place, so nothing changes for them. The real test is how G-SIB branches adjust to the buffer requirement without passing costs to borrowers. Watch the comments RBI receives by August 28, especially from foreign banks, to see if the central bank tweaks the buffer or stands firm.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
