RBI recently announced that State Bank of India, ICICI Bank, and HDFC Bank continue to be identified as systemically important banks in India. The additional common equity tier 1 requirement as a percentage of risk-weighted assets is 0.6% for the State Bank of India while this requirement is 0.2% for HDFC Bank and ICICI Bank; this capital requirement will be in addition to the capital conservation buffer.
The additional common equity tier 1 requirement for domestic systemically important banks was phased-in from April 01, 2016 and became fully effective from April 01, 2019. RBI had issued the framework for domestic systemically important banks on July 22, 2014. This framework requires RBI to disclose the names of banks designated as domestic systemically important banks and place these banks in appropriate buckets, depending on their Systemic Importance Scores. Based on the bucket in which such a bank is placed, an additional common equity requirement has to be applied to it. In case a foreign bank with a branch in India is a global systemically important bank or G-SIB, it has to maintain additional common equity tier 1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its risk-weighted assets in India.
Keywords: Asia Pacific, India, Banking, D-SIBs, Basel, Regulatory Capital, Systemic Risk, RBI
Previous ArticleBundesbank Publishes Derivation Rules for Reporting by Banks
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.