BASEL
BASEL NORMS
The Basel III capital regulation has been implemented from April
1, 2013 in India in phases and it will be fully implemented as on
March 31,2020.
3 Pillars of Basel for computation of CRAR
- Minimum Capital Requirement
- Supervisory Review of capital adequacy
- Market Discipline
Banks are required to maintain a minimum Pillar 1 Capital to
Risk-weighted Assets Ratio (CRAR) of 9% on an on-going basis
(other than Capital Conservation Buffer and
Countercyclical Capital Buffer etc.)
BASEL
BASEL NORMS
CAR = Capital Funds x 100 / Risk Weighted Assets = 9%
Tier 2 Capital (gone-concern capital)
Tier 1 is core own capital , Tier 2 is borrowed capital in the form of
From Regulatory Capital perspective
Going-concern capital is the capital which can absorb losses without
triggering bankruptcy of the bank.
Gone-concern capital is the capital which will absorb losses only in a
situation of liquidation of the bank
BASEL
BASEL NORMS
1 Minimum Common Equity Tier 1 ratio 5.5
2 Capital conservation buffer (comprised of Common
Equity) 2.5
3 Minimum Common Equity Tier 1 ratio plus capital
conservation buffer (1+2) 8.0
4 Additional Tier 1 Capital 1.5
5 Minimum Tier 1 capital ratio (1+4) 7.0
6 Tier 2 capital 2.0
7 Minimum Total Capital Ratio (MTC) [5+6) 9.0
8 Minimum Total Capital Ratio plus capital
conservation buffer (7+2) 11.5
BASEL
BASEL NORMS
Credit Risk Standard Approach Approaches for computation of
risk ( Foundation Internal Rating Based approach, Advanced
Internal Rating based Approach.)
Market Risk Standard Approach (comprising maturity method
& duration method, Internal Models approach)
Operational Risk (Basic Indicator Approach, Standard Approach,
Advanced Measurement Approach)
BASEL
IMPORTANT RISK WEIGHTS IMPORTANT RISK WEIGHTS
Cash balance with RBI and GECL LOAN 0%
Balance with other Banks , 20%
Secured Loans to Staff by mortgage /
Superannuation benefits 20%
Other Staff Loans, EL to all 75%
Loans upto 1 lac against gold 50%
Loans guaranteed by State Govt & ECGC 20%
Guaranteed by Central Govt., CGTMSE,
DICGC, Cash Balance with RBI, Adv against
TDs LIC, NSC 0%
Consumer credit, Personal Loan 100%
Credit Card, Capital Market 125%
Venture Capital 150%