RBI board's move to defer capital conservation buffer under Basel III norms could help PSBs get Rs 35,000 cr breather: CRISIL

Kolkata: The RBI Boards decision to extend the timeline for implementation of the last tranche of capital conservation buffer (CCB) under Basel III capital regulations could reduce the burden of public sector banks by Rs 35,000 crore this fiscal, a rating agency said.

Representational image. Reuters

Representational image. Reuters

"This will provide some breathing space to capital-starved PSBs," CRISIL Ratings senior director Krishnan Sitaraman said.

"As per our earlier estimates, they needed Rs 1.2 lakh crore over the next five months up to March 2019 to meet Tier 1 capital stipulated under Basel III norms. Now they would need only Rs 85,000 crore on the implementation of deferral of the last tranche of CCB," he said.

The Reserve Bank of India board on Monday decided to extend implementation of the CCB norm of 0.625 percent of risk weighted assets (RWA) by a year to March 2020.

CCB is the capital buffer that banks have to accumulate in normal times to be used for offsetting losses during periods of stress. It was introduced after the 2008 global financial crisis to improve the ability of banks to withstand adverse economic conditions.


Updated Date: Nov 21, 2018 12:26 PM

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