Mumbai, Aug. 7 -- Mumbai: The Reserve Bank of India (RBI) on Friday proposed incorporating the updated Basel III leverage ratio framework into its capital adequacy rules for commercial banks, according to a draft circular.

The change would align the 2025 capital adequacy directions with the latest Basel Committee on Banking Supervision framework, strengthening banks' resilience by imposing a simple cap on overall leverage regardless of the risk profile of individual assets.

It has invited comments from stakeholders by 28 August and said the amendment, once finalized, will come into effect from 1 April 2027.

The leverage ratio measures a bank's core capital relative to its total exposure, without accounting for the riskiness of its loan...