MANU/RMIC/0028/2016

Ministry : Reserve Bank of India

Department/Board : Department of Banking Regulation

Circular No. : DBR.No.BP.BC.83/21.06.201/2015-2016
                   RBI/2015-2016/331

Date : 01.03.2016

Notification/ Circulars Referred : Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 MANU/RMIC/0291/2015;Circular DBOD.BP.BC.No.50/21.04.018/2006-07 January 4, 2007 MANU/DBOD/0002/2007

Citing Reference:
Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 MANU/RMIC/0291/2015  Referred

Circular DBOD.BP.BC.No.50/21.04.018/2006-07 January 4, 2007 MANU/DBOD/0002/2007  Referred

All Scheduled Commercial Banks
(Excluding Local Area Banks
and Regional Rural Banks)

Madam / Sir,

Master Circular - Basel III Capital Regulations - Revision

Please refer to Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on 'Basel III Capital Regulations'. The treatment of certain balance sheet items, as per the extant regulations on banks' capital, differs from what is prescribed by the Basel Committee on Banking Supervision (BCBS). It has also been represented to the Reserve Bank that the current framework places on the banks in India the need to raise more capital than would be required had the Basel rules been applied as they are. The Reserve Bank has reviewed the position in this regard and it has been decided to align, to some extent, the current regulations on treatment of these balance sheet items, for the purpose of regulatory capital, with the BCBS guidelines. Accordingly it has been decided as detailed herein below:

2.1 Treatment of revaluation reserves

Revaluation reserves arising out of change in the carrying amount of a bank's property consequent upon its revaluation may, at the discretion of banks, be reckoned as CET1 capital at a discount of 55%, instead of as Tier 2 capital under extant regulations, subject to meeting the following conditions:

• bank is able to sell ........