Leverage
Ratio
ØBasel III
prescribes a leverage ratio (ratio of Tier 1 capital to total exposures including off-balance sheet items) as
backstop measure to supplement the risk-based capital adequacy ratio. Our view
has been that since for Indian banks, the SLR requirements are substantial and
carry little risks, these should be kept out of the leverage ratio. However, this was not accepted by the BCBS.
But the comforting news is that the leverage ratio of Indian banks is modest
compared to the levels being contemplated.
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