Prudential Guidelines on Capital Adequacy and Liquidity Standards: RBI

RBI/2014–15/529
DBR.No.BP.BC.80/21.06.201/2014–15 March 31, 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.

Yours faith­ful­ly,

(Sudar­shan Sen)
Chief Gen­er­al Manager-in-Charge