RBI revises leverage ratio, disclosure norms for banks

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Chennai, Jan 8 (IANS) The Reserve Bank of India (RBI) Thursday revised the guidelines for leverage ratio framework under the Basel III and the relevant disclosure norms.

The central bank said banks operating in India are required to make disclosure of the leverage ratio and its components from the date of publication of their first set of financial statements/results on or after April 1, 2015.
Accordingly, the first such disclosure should be made for the quarter ending June 30, 2015.
The RBI said leverage ratio is calibrated to act as a credible supplementary measure to the risk based capital requirements and is intended to achieve the following objectives: (a) constrain the build-up of leverage in the banking sector to avoid destabilising deleveraging processes which can damage the broader financial system and the economy; and (b) reinforce the risk-based requirements with a simple, non-risk based “backstop” measure.
Noting that presently Indian banking system is operating at a leverage ratio of more than 4.5 percent, it said the final minimum leverage ratio will be stipulated taking into consideration the final rules prescribed by the Basel Committee by end-2017.
In the meantime, the Thursday guidelines will serve as the basis for parallel run by banks and also for the purpose of disclosures.
“During this period, Reserve Bank will monitor individual banks against an indicative leverage ratio of 4.5 percent,” the RBI said.

Last modified: March 21, 2017