Banking Risk Monthly Outlook: March 2026

Our banking risk experts provide insight into these events impacting the financial sector in emerging markets in March:

• Enhancements to supervisory oversight and process in India
• Ukraine’s prudential alignment
• Hungary's lower reserve requirement
• Brazilian adjustments to deposit insurance fund
• Lebanese government's exploration of gold reserve sale by central bank
• Zambia’s implementation of Basel III liquidity requirements

Enhancements to supervisory oversight and process in India are expected for domestic banks. 

The Reserve Bank of India is set to outline adjustments to its supervisory process applicable to commercial banks, non-bank financial institutions and cooperative lenders, according to initial reporting by Bloomberg.

Concrete details are still outstanding, although a supervisory shift towards forward-looking risk assessments and the introduction of bank-specific add-on (Pillar 2) capital requirements — beyond the domestic systemically important buffer and as recommended by the International Monetary Fund (IMF) in 2024 — are likely.

Ukraine’s prudential alignment is set to raise banks’ total capital requirements. 

The earmarked introduction of the capital conservation buffer (CCoB) and systemic importance buffer from Jan. 1, 2027, at a maximum cumulative 4.5% of risk weighted assets, is set to increase the average total capital requirement for local banks. This is despite the planned reduction of the minimum total capital requirement of 10% to 8% in tandem.

In view of the increased corporate tax rate (of 50%) for the sector and ongoing remedial plans for select lenders through 2026, a weaker capital growth outlook is likely to weigh on banks’ capacity to continue the pace of credit expansion seen in 2024 and 2025.

Lower reserve requirement likely to have a contained positive impact on Hungarian banks’ credit supply. 

The latest reserve requirement reduction — to 6% from 8% — from March 1, 2026, is expected to have a contained positive impact on credit growth through 2026. The current surplus stock of reserves above the minimum requirement — which stood at an average of 155 billion Hungarian forints through January 2026 — will provide additional liquidity to fund new lending.

However, risk aversion following the increase in US tariffs combined with limited monetary policy easing and recent prudential tightening should keep headline credit growth contained over 2026.

Brazilian authorities will continue to make adjustments to the deposit insurance fund as the Banco Master liquidation process continues. 

As the Banco Master liquidation case continues, it is likely that further developments will be made. Particularly, we expect the Prosecutor General's Office to release further details of the status of the portfolio of Banco Master, including statements related to the extent of losses.

It is likely that Congress will continue to discuss legislative changes regarding the rules of the deposit insurance fund. Such reform could imply a narrower coverage of banks’ liabilities, mainly focusing on a more constrained definition of deposits.

The Lebanese government is looking into the sale of the central bank’s gold reserves. 

While the current version of the financial gap law rules out the sale or use of gold, the government is considering legislation authorizing the sale of gold reserves valued at US$45 billion to bridge the gap. 

According to an internal report by Ankura, a consulting group tasked by the Association of Banks in Lebanon (ABL), it indicates that most Lebanese banks lack the liquidity to meet the proposed four-year repayment obligations.

The plan requires roughly US$20 billion in payments over four years, while shareholders’ equity stood at US$4.9 billion as of the end of September 2025. The sale of gold to reduce the repayment obligations of commercial banks is not opposed by the IMF.

Zambia’s implementation of Basel III liquidity requirements will likely enhance liquidity resilience but could amplify bank-sovereign nexus and initially slow credit growth. 

The Bank of Zambia (BoZ) plans to introduce new liquidity regulations and implement the net stable funding ratio (NSFR) in June 2026, aiming to enhance stable funding and mitigate funding risk and maturity mismatches in the banking sector. Concurrently, the liquidity coverage ratio (LCR) will be phased in over five years to allow banks to gradually build high-quality liquid asset (HQLA) buffers, smoothing earnings and credit supply adjustments.

These measures are expected to address vulnerabilities such as liquidity gaps and high dollarization and support long-term credit growth. The implementation could lead to increased sovereign debt holdings, currently at 20.7% of total assets, due to government securities being the primary source of HQLA, potentially strengthening the sovereign-bank nexus and initially slowing credit growth in 2026.

—With contributions from Tan Wang and Thandeka Nyathi