Reserve Bank of India proposes lower capital requirements for banks

RBI's draft norms propose revised risk weights across corporate, MSME, real estate, and retail exposures, aiming to reduce banks' capital requirements from FY28

The Reserve Bank of India (RBI) has proposed a nuanced and granular risk weighting for exposures to both big and small companies, and real estate -- a move that will result in reduced capital requirements for banks.

 

The proposed directions seek to implement one of the key elements of the global reforms implemented by the Basel Committee on Banking Supervision (BCBS), and have been tailored to the Indian context, the RBI said.

 

These norms amend the standardised-approach framework for calculating capital charges for credit risk.

 

“Overall, the proposed changes are estimated to have a positive impact on the minimum regulatory