RBI Proposes Stricter Basel Pillar 3 Disclosures on Capital and Risk for Banks

The Reserve Bank of India (RBI) on Tuesday released a draft framework proposing wider disclosure requirements for banks under Basel III norms, as per PTI reports.  

The proposed changes relate to capital adequacy, liquidity, leverage, and risk exposure, with the focus on improving transparency in the banking system. 

Under the draft circular, banks would be required to publish quarterly disclosures in a standardised format. The disclosures would cover Common Equity Tier 1 (CET1) capital, total capital ratio, risk-weighted assets (RWAs), leverage ratio, liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). 

Quarterly Reporting Requirements 

The RBI has proposed that banks explain material changes in these indicators compared with earlier reporting periods. Lenders would also need to disclose the reasons behind such movements and provide details on management actions taken in response. 

According to the draft norms, banks should provide information on their principal business activities and risks linked to those operations.  

The disclosures are to include both qualitative and quantitative details related to risk identification, measurement, and management practices. 

Website Disclosure and Archive Rules 

Banks would also be required to maintain a separate ‘Regulatory Disclosure Section’ on their websites for publishing Pillar 3 disclosures.  

The RBI has proposed that all reports relating to previous reporting periods remain available on the website for at least 10 years. 

The draft framework states that Pillar 3 disclosures must be published simultaneously with financial statements for the relevant period.  

In cases where a bank does not issue financial statements for a reporting cycle, the disclosures would still need to be published separately at the earliest possible date. 

Limited Exemptions Proposed 

The draft circular allows banks to withhold disclosures in cases where the information is considered immaterial. This could apply where exposures or RWA amounts are not viewed as meaningful to users of the disclosures. 

However, banks would be required to provide a narrative explanation for any non-disclosure. The RBI said institutions must clarify why the information has been omitted from the reporting template or table. 

The central bank has invited comments on the draft circular until June 2. The proposed norms are scheduled to take effect from the quarter ending September 30, 2026. 

Read More: SEBI Clarifies Non-Discretionary PMS Clients to Pledge Demat Securities! 

Conclusion  

The draft circular introduces additional reporting requirements for banks under Pillar 3 of Basel III norms, including website disclosures and long-term archival obligations. Comments on the proposal have been invited until June 2. 

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