CIRCULAR DBR.NO.BP.BC.80/21.06.201/2014-15, DATED 31-3-2015

AMENDMENT IN PRUDENTIAL GUIDELINES ON CAPITAL ADEQUACY AND LIQUIDITY STANDARDS

CIRCULAR DBR.NO.BP.BC.80/21.06.201/2014-15DATED 31-3-2015

As you are aware, the Reserve Bank has issued and implemented prudential guidelines on capital adequacy framework and liquidity standards for banks operating in India. These guidelines have been framed based on the internationally accepted reform package, as agreed to by the Basel Committee on Banking Supervision (BCBS) and endorsed by the G20 Leaders post-crisis. Accordingly, it is important to adopt and implement these minimum prudential standards in a manner which is consistent across all member jurisdictions. Such consistent implementation not only provides a level playing field for banks but also reduces regulatory arbitrage and promotes financial stability to a great extent.

2. In this context, it is considered desirable to make certain modifications/amendments to the guidelines on Basel III capital and liquidity regulations, implementation of advanced model-based approaches for credit, market and operational risk, guidelines on compensation and securitisation exposures, etc., with a view to more closely align our regulatory framework with the internationally agreed standards.

3. Accordingly, the above modifications/amendments are given in the Annex. These changes become applicable with effect from April 1, 2015.