---
title: "India's central bank proposes to ease banks' capital adequacy needs"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/281985063.md"
description: "India's central bank has proposed easing capital adequacy norms for banks by eliminating the requirement for an investment fluctuation reserve, which was intended to protect against investment depreciation. Additionally, the Reserve Bank of India suggested relaxing the calculation of the capital to risk-weighted assets ratio, allowing banks to use quarterly earnings for this metric under certain conditions. These changes aim to enhance banks' capital strength and adaptability in the financial landscape."
datetime: "2026-04-08T06:16:21.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/281985063.md)
  - [en](https://longbridge.com/en/news/281985063.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/281985063.md)
---

# India's central bank proposes to ease banks' capital adequacy needs

By Ashwin Manikandan

MUMBAI, April 8 (Reuters) - India's central bank on Wednesday proposed ‌to ease banks' capital adequacy norms ‌by doing away with the requirement for lenders ​to maintain an investment fluctuation reserve.

The reserve was introduced to help banks hedge against depreciation in the value of investments.

"In ‌view of the ⁠developments in prudential framework over the years, it is proposed ⁠to dispense...IFR as an additional buffer," Reserve Bank of India Governor Sanjay Malhotra ​said in ​his monetary policy ​address in Mumbai.

The ‌Reserve Bank of India also proposed to relax norms for banks to calculate the capital to risk-weighted assets ratio using quarterly earnings.

The ratio is a key ‌financial metric to measure ​banks' capital strength against ​their risk-weighted assets ​that account for bad loans.

As ‌per current rules, banks ​can only ​use quarterly profits for capital strength calculations if the earnings are audited ​and all ‌bad loan provisions are recognized.

(Reporting by ​Ashwin Manikandan and Gopika Gopakumar; Editing ​by Mrigank Dhaniwala)

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