RBI Relaxes Leverage Ratio for Banks

  • On 28th June, 2019, Reserve Bank of India (RBI) relaxed leverage ratio (LR) for banks to help them boost their lending activities and to harmonise LR in line with Basel III standards keeping in mind financial stability of financial firms.
  • The LR now stands reduced to 4% for Domestic Systemically Important Banks (DSIBs) and 3.5% for other banks effective from quarter commencing October 1, 2019.

Impact

  • The relaxation in leverage ratio could help some of the banks currently under PCA comply with the leverage framework.

Leverage Ratio

  • The leverage ratio under the Basel III regulatory framework for banks is defined ....
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