January 10, 2019

RBI issued a circular that amends the transitional arrangements for capital conservation buffer (CCB) under the Basel III capital regulations.

Referring to paragraph 4.5 “Transitional Arrangements,” paragraph 15.2.2 of Part D “Capital Conservation Buffer Framework, and paragraph 2.3 of Annex 16 of the Master Circular dated July 01, 2015 on Basel iii capital regulations, RBI has decided to defer the implementation of the last tranche of 0.625% of capital conservation buffer (CCB) from March 31, 2019 to March 31, 2020. Accordingly, minimum capital conservation ratios in paragraph 15.2.2 of Part D as applicable from March 31, 2018 will also apply from March 31, 2019 till the CCB attains the level of 2.5% on March 31, 2020. Furthermore, the pre-specified trigger for loss absorption through conversion/write-down of additional tier 1 instruments (Perpetual Non-Cumulative Preference Shares and Perpetual Debt Instruments) shall remain at 5.5% of the risk-weighted assets (RWAs) and will rise to 6.125% of RWAs on March 31, 2020.

Keywords: Asia Pacific, India, Banking, Basel III, Transitional Arrangements, CCB, RWA, Capital Requirements, Additional Tier 1, RBI