The Reserve Bank of India proposed to relax the capital adequacy requirements for banks.

The Reserve Bank of India on Wednesday proposed to abolish the requirement for banks to establish investment fluctuation reserves, in order to relax capital adequacy-related regulatory standards. The purpose of the reserve mechanism was to help banks hedge against the risk of depreciation of investment assets. Reserve Bank of India Governor Shaktikanta Das stated in a monetary policy speech in Mumbai: "Given the development of a prudent regulatory framework over the years, it is now proposed to abolish... the additional buffer requirement for investment fluctuation reserves." The Reserve Bank of India also proposed to relax related rules, allowing banks to calculate capital adequacy ratios using quarterly profit data. This ratio is a key financial indicator for measuring the strength of a bank's capital, used to assess the level of capital adequacy relative to risk-weighted assets including non-performing loans.