New Basel Proposal’s Revised ‘Commitment’ Definition Could Reshape Bank Regulation

Since 1989, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation have limited “commitments” to arrangements under which banks are legally obligated to extend credit or purchase assets. The proposed definition would include uncommitted facilities that carry no legal obligation, potentially raising capital requirements for large banks and increasing inventory and reporting costs for small and midsize lenders.

The three regulators unveiled the revised Basel III proposal on March 19, 2026, seeking to raise the credit conversion factor for unconditionally cancelable commitments to 10% from 0%. The comment period closes on June 18. The American Bankers Association and other groups called that same day for the current definition to be retained. Mayer Brown said it had drafted comment letters for about six industry associations and made the issue their top priority.