**Summary:**
This Reserve Bank of India (RBI) circular (DOR.CAP.BC.No.3421.06.201/2020-21 dated February 5, 2021) addresses all commercial banks (excluding Small Finance Banks, Payments Banks, RRBs, and LABs) regarding a review of transitional arrangements for Basel III Capital Regulations. Specifically, it defers the implementation of the final tranche (0.625%) of the Capital Conservation Buffer (CCB) from April 1, 2021, to October 1, 2021, due to ongoing COVID-19 related stress and to support economic recovery. Consequently, the minimum capital conservation ratios outlined in para 15.2.2 of Part D of 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 October 1, 2021. The pre-specified trigger for loss absorption through conversion/write-down of Additional Tier 1 instruments will remain at 5.5% of Risk Weighted Assets (RWAs) and increase to 6.125% of RWAs from October 1, 2021. Usha Janakiraman, Chief General Manager, is the contact person for inquiries. The original circular which this is an amendment to is DOR.BP.BC.No.15/21.06.201/2020-21 dated September 29, 2020.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for monetary policy and regulation of the banking system.
Basel III Capital Regulations: An international regulatory framework for banks, designed to improve risk management and capital adequacy.
Small Finance Banks: A type of bank in India aimed at providing financial services to underserved populations.
Payments Banks: A type of bank in India that is allowed to accept deposits and provide payments and remittance services.
RRBs: Regional Rural Banks in India.
LABs: Local Area Banks in India.
COVID-19: The coronavirus disease 2019 pandemic.
Capital Conservation Buffer (CCB): A buffer of capital that banks are required to hold to absorb losses during periods of financial stress.
भारतीय �रजव र् ब�क
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2020-21/93
DOR.CAP.BC.No.34/21.06.201/2020-21 February 5, 2021
All Commercial Banks
(Excluding Small Finance Banks, Payments Banks, RRBs and LABs)
Dear Sir/Madam,
Basel III Capital Regulations- Review of transitional arrangements
Please refer to circular DOR.BP.BC.No.15/21.06.201/2020-21 dated September 29,
2020 on ‘Basel III Capital Regulations- Review of transitional arrangements’.
2. In view of the continuing stress on account of COVID-19 and in order to aid in the
recovery process, it has been decided to defer the implementation of the last tranche
of 0.625 per cent of the Capital Conservation Buffer (CCB) from April 1, 2021 to
October 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
October 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 October 1, 2021.
Yours faithfully
(Usha Janakiraman)
Chief General Manager