Basel III

The international bank capital and liquidity standards agreed after the 2008 crisis, which the RBI applies to Indian banks with stricter numbers in several places. They set how much loss-absorbing capital a bank must hold against its risk-weighted assets, cap its leverage, and require liquidity buffers.

Under the RBI's version a bank must hold common equity of at least 5.5% of risk-weighted assets plus a 2.5% capital conservation buffer, 8% in all, and total capital of at least 11.5% including the buffer. A bank with ₹2,00,000 crore of risk-weighted assets therefore needs at least ₹16,000 crore of common equity. A separate leverage ratio, Tier 1 capital over total exposure, must stay above 4% for the largest banks and 3.5% for the rest, and the liquidity coverage ratio and net stable funding ratio set the liquidity floors.

Watch the buffer above each minimum and how fast it's shrinking.