**Summary:**
This Reserve Bank of India (RBI) circular (RBI/2020-21/42 DOR.BP.BC.No.15/21.06.201/2020-21) dated September 29, 2020, addresses all commercial banks excluding Small Finance Banks, Payment Banks, Regional Rural Banks (RRBs), and Local Area Banks (LABs) regarding a review of transitional arrangements for Basel III capital regulations. Specifically, it announces a deferral of the final tranche (0.625%) of the Capital Conservation Buffer (CCB) implementation from September 30, 2020, to April 1, 2021, due to continuing stress related to COVID-19. Consequently, the minimum capital conservation ratios outlined in para 15.2.2 of Part D of the Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015, will remain in effect until the CCB reaches 2.5% on April 1, 2021. Furthermore, the pre-specified trigger for loss absorption via conversion/write-down of Additional Tier 1 instruments (Perpetual Non-Convertible Preference Shares and Perpetual Debt Instruments) will remain at 5.5% of Risk-Weighted Assets (RWAs) and will increase to 6.125% of RWAs from April 1, 2021. Usha Janakiraman, Chief General Manager, is the contact person for this circular.
Key Entities Referenced
Basel III Capital Regulations: A set of international banking regulations
Small Finance Banks: A type of bank in India
Payment Banks: A type of bank in India
RRBs: Regional Rural Banks in India
LABs: Local Area Banks in India
COVID 19: Coronavirus disease 2019, the infectious disease caused by SARS-CoV-2
Capital Conservation Buffer: A buffer of capital that banks are required to hold to absorb losses during periods of financial stress
Usha Janakiraman: Chief General Manager at Reserve Bank of India
RBI/2020-21/42
DOR.BP.BC.No15/21.06.201/2020-21 September 29, 2020
All Commercial Banks
(Excluding Small Finance Banks, Payment Banks, RRBs and LABs)
Dear Sir/Madam,
Basel III Capital Regulations- Review of transitional arrangements
Please refer to circular DOR.BP.BC.No.45/21.06.201/2019-20 dated March 27, 2020
on ‘Basel III Capital Regulations- Review of transitional arrangements’.
2. In view of the continuing stress on account of COVID -19, it has been decided to
defer the implementation of the last tranche of 0.625 per cent of the Capital
Conservation Buffer (CCB) from September 30, 2020 to April 1, 2021. Accordingly,
the minimum capital conservation ratios in para 15.2.2 of Part D ‘Capital
Conservation Buffer Framework’ of Master Circular, DBR.No.BP.BC.1/
21.06.201/2015-16 dated July 1, 2015 on ‘Basel III Capital Regulations’, shall
continue to apply till the CCB attains the level of 2.5 per cent on April 1, 2021.
3. The pre-specified trigger for loss absorption through conversion / write-down of
Additional Tier 1 instruments (Perpetual Non-Convertible Preference Shares and
Perpetual Debt Instruments), shall remain at 5.5 per cent of risk weighted assets
(RWAs) and will rise to 6.125 per cent of RWAs from April 1, 2021.
Yours faithfully
(Usha Janakiraman)
Chief General Manager