RBI Amends Basel III Rule on Risk-Weights for Rated Exposures to NBFCs
RBI has decided that exposures to all non-banking financial companies (NBFCs), excluding the core investment companies (CICs), will be risk-weighted as per the ratings assigned by the rating agencies registered with the Securities and Exchange Board of India (SEBI) and accredited by RBI. This has been done with a view to facilitate flow of credit to well-rated NBFCs and will be done in a manner similar to that of corporates.
This requirement refers to guidance as prescribed under paragraph 5.8.1 of the Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 on Basel III Capital Regulations, which is to be read in conjunction with the Circular DBR.No.BP.BC.6/21.06.001/2016-17 dated August 25, 2016 on “Review of Prudential Norms—Risk Weights for Exposures to Corporates, Asset Finance Companies (AFCs) and NBFC-IFCs [Infrastructure Finance Companies]” and Mailbox Clarification dated December 29, 2017. However, exposures to CICs, rated as well as unrated, will continue to be risk-weighted at 100%. At present, under the existing guidelines on Basel III capital regulations, exposures/claims of banks on rated as well as unrated non-deposit-taking systemically important non-banking financial companies (NBFC-ND-SI), other than AFCs, NBFCs-IFCs, and NBFC-IDF [Infrastructure Development Funds], have to be uniformly risk-weighted at 100%. Exposures to AFCs, NBFCs-IFC, NBFCs-IDF, and other NBFCs that are not NBFC-ND-SI are risk-weighted as per the ratings assigned by the rating agencies accredited by RBI.
Keywords: Asia Pacific, India, Banking, Basel III, Capital Regulations, Risk Weights, NBFC, Rated Exposures, Credit Ratings, RBI
Related Articles
|
News
US Agencies Consult on Capital Treatment of Land Development LoansUS Agencies (FDIC, FED, and OCC) issued a proposed rule on the treatment of loans that finance the development of land for purposes of the one- to four-family residential properties exclusion in the definition of high volatility commercial real estate (HVCRE) exposure in the regulatory capital rule.
July 12, 2019
WebPage
Regulatory News
|
|
News
EBA Single Rulebook Q&A: Second Update for July 2019Under the Single Rulebook question and answer (Q&A) updates for this week, EBA published answers to five questions related to supervisory reporting.
July 12, 2019
WebPage
Regulatory News
|
|
News
ESMA Updates Manual for European Single Electronic Format in EUESMA updated the reporting manual for European Single Electronic Format (ESEF).
July 12, 2019
WebPage
Regulatory News
|
|
News
FED Updates Supplemental Instructions for Reporting Form FR Y-9CFED updated the supplemental instructions for FR Y-9C reporting.
July 12, 2019
WebPage
Regulatory News
|
|
News
EBA Publishes Report on Monitoring Implementation of LCR in EUEBA published its first report on the monitoring of the implementation of liquidity coverage ratio (LCR) in EU.
July 12, 2019
WebPage
Regulatory News
|
|
News
APRA Applies Additional Capital Requirements to Three Australian BanksAPRA is applying additional capital requirements to three major banks in Australia to reflect higher operational risk identified in their risk governance self-assessments.
July 11, 2019
WebPage
Regulatory News
|
|
News
IMF Report on 2019 Article IV Consultation on Euro Area PoliciesIMF published its staff report in context of the 2019 Article IV consultation on euro area policies with member countries.
July 11, 2019
WebPage
Regulatory News
|
|
News
FSB to Survey Practices on Cyber Incident Response and RecoveryFSB launched a survey on the industry practices on cyber incident response and recovery.
July 11, 2019
WebPage
Regulatory News
|
|
News
ECB Appoints New Members of Supervisory BoardThe Governing Council of ECB appointed Edouard Fernandez-Bollo, Kerstin af Jochnick, and Elizabeth McCaul as representatives to the Supervisory Board of ECB Banking Supervision, for a five-year non-renewable term.
July 11, 2019
WebPage
Regulatory News
|
|
News
OSFI Consults on Applying Proportionality to Pillar 1 Rules in CanadaOSFI published a discussion paper seeks input on possible tailoring of the capital and liquidity requirements for small and medium-size deposit-taking institutions.
July 11, 2019
WebPage
Regulatory News
|
