The Reserve Bank of India has rejected Religare Enterprises' demerger proposal on August 6, 2026, dealing a setback to the Burman family-backed company's restructuring plans. Religare Finvest Ltd also received a similar communication from the regulator on August 7, 2026. Under the proposed scheme of arrangement, Religare Enterprises was to retain its stake in Care Health Insurance and continue as an insurance-focused entity, while the financial services business comprising lending, broking, investment activities, and related ancillary services was proposed to be transferred to Religare Finvest on a going-concern basis. The financial services business was expected to be listed separately on stock exchanges following the demerger. Following the demerger, shareholders were to receive one share of Religare Finvest for every share held in Religare Enterprises. The company had received no-objection certificates from both NSE and BSE in July 2026, but both REL and RFL had submitted applications to the RBI seeking its no-objection to the scheme. The company has committed to engage with the regulator for further clarifications as required. In February, the company's Board of Directors approved the demerger plan, making the RBI's rejection particularly significant for the restructuring timeline.
The Reserve Bank of India has proposed a minimum 3.5% leverage ratio plus applicable buffer for branches of globally systemic important banks (G-SIB) in India, while continuing with its mandate of a minimum 4% ratio for domestic systemically important banks like SBI, HDFC Bank and ICICI Bank. For all other commercial banks in India, the minimum required leverage ratio is proposed to remain at 3.5% as earlier. The proposals align with the latest leverage ratio framework issued by the Basel Committee on Banking Supervision, as confirmed by the RBI. Additional buffer requirement for global systemically important banks - a branch of a global systemically important bank (G-SIB) in India shall maintain a leverage ratio of 3.5% along with an additional buffer required by its home country's regulator. The leverage ratio measures a bank's core capital relative to its total exposure, without accounting for the riskiness of its loans or investments, acting as a safety backstop to regular capital rules. According to The Economic Times, the amendments seek to align India's regulations with the latest leverage ratio framework, referred to as the "Leverage Ratio 2017 Standard" issued by the Basel Committee on Banking Supervision.
The draft guideline states that capital distribution constraints will be imposed on a G-SIB branch which does not meet its leverage ratio buffer requirement. The capital distribution constraints imposed on the branch will depend on its common equity tier 1 risk-based ratio and its leverage ratio. According to The Economic Times, the central bank has also proposed restrictions on capital distributions by a G-SIB branch if it fails to meet its leverage ratio buffer requirement. The restrictions would depend on whether the branch meets its Common Equity Tier 1 (CET1) risk-based capital requirements and leverage ratio requirements. If a G-SIB branch fails to maintain the required buffer, the RBI could restrict the amount of profit it can distribute as dividends or bonuses. In the most serious cases, the bank may be prohibited from distributing any profits until its capital position improves. The demerger rejection means these capital distribution restrictions will not be implemented for the time being.
The draft amendment introduces granular rules for derivatives, securities financing transactions (SFTs), and off-balance sheet items following the Basel Committee's 2017 standard. The leverage ratio framework now includes a fixed 1.4 alpha multiplier combined with strict conditions for netting and cash variation margin recognition. For SFTs, the exposure measure combines gross SFT assets with counterparty credit risk add-ons, while banks acting as agents generally don't need to recognize SFTs unless providing indemnity. The framework also addresses written credit protection, where the effective notional amount must generally be added to the exposure measure, treated similarly to cash loans or bonds. RBI has introduced a new risk multiplier of 1.4 for derivative contracts, thereby upping the amount of exposure banks must report. This will give a more conservative estimate of the risks involved. The central bank said banks cannot reduce their reported exposure by using collateral or guarantees, ensuring they show their true level of leverage rather than making it appear lower through risk-reduction techniques. Under the draft, derivative exposure would generally be calculated using a multiplier of 1.4 times the sum of replacement cost and potential future exposure, subject to specified conditions for netting and other adjustments.
The proposed changes form part of the draft Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Eleventh Amendment Directions, 2026, as confirmed by The Economic Times. The central bank has invited comments on these draft guidelines until August 28, 2026, providing stakeholders with an opportunity to provide feedback on the proposed changes to leverage ratio requirements for Indian banks. If finalized, the proposed effective date is April 1, 2027, requiring banks to rebuild exposure calculation logic well before the implementation date. The regulator has not disclosed the specific reasons for rejecting the demerger proposal. Unlike risk-weighted capital rules, the leverage ratio captures all major exposures, including on-balance-sheet assets, derivative exposures, securities financing transactions and off-balance-sheet commitments, without allowing broad reductions through collateral, guarantees or netting unless specifically permitted.
Under the new framework, banks must maintain quarterly public disclosure of the Basel III leverage ratio, both standalone and consolidated, along with quarterly reporting to RBI's Department of Supervision with full capital and exposure-measure calculation detail. The draft introduces two new Pillar 3 disclosure templates (LR1 and LR2) that demand line-item reconciliation most banks don't currently maintain. The leverage ratio framework follows the same scope of regulatory consolidation used for the risk-based capital framework, with exposure measures generally following gross accounting values and banks not allowed to net assets against liabilities. A bank shall publicly disclose its quarterly Basel III leverage ratio both on a standalone and consolidated basis, with banks required to report the leverage ratio and detailed capital and exposure calculations to RBI every quarter. The central bank may take supervisory action where transactions are used to inadequately capture leverage or could lead to a potentially destabilizing deleveraging process. In exceptional macroeconomic circumstances, RBI may also temporarily exclude balances maintained by banks with the central bank from the leverage ratio exposure measure, however, the minimum leverage ratio requirement would be increased correspondingly to maintain the same level of resilience.
