The Reserve Bank of India’s Basel III capital rules
By Shawn Paul - Regional Director, Wolters Kluwer Financial Services’ FRSGlobal and Selwyn Blair-Ford - Head Of Global Regulatory Policy at Wolters Kluwer Financial Services’ FRSGlobal
On Wednesday 2nd May, the Reserve Bank of India (RBI) issued the final guidelines for implementation of Basel III capital regulation in India, which will be effective from January 1 2013, and applied in a phased manner.
Overall, the RBI has stuck to the guidelines issued by the Basel Committee of Banking Supervision (BCBS), but certain variations are apparent which reinforce the regulator’s intent on taking active steps to improve the sector’s management and transparency which will likely set a precedent among other local regulators.
The most notable divergence is in the minimal capital requirements (MCR) – which have been increased 1% above the 4.5% global standards. Another significant difference is that the deadline for capital ratio implementation has been brought forward to 31 March 2018 – nine months before the BCBS’s proposed timelines. The issues surrounding capital shouldn’t cause too many headaches given that the majority of Indian banks (and banks in Asia as a whole) have a comparatively high amount of capital than other jurisdictions. (more...)