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Date: May 02, 2012
Guidelines on Implementation of Basel III Capital Regulations in India

RBI/2011-12/530
DBOD.No.BP.BC.98 /21.06.201/2011-12

May 2, 2012

The Chairman and Managing Directors/
Chief Executives Officers of
All Scheduled Commercial Banks
(Excluding Local Area Banks and Regional Rural Banks)

Madam / Dear Sir,

Guidelines on Implementation of Basel III Capital Regulations in India

Please refer to the paragraph 90 (extract enclosed) of the Monetary Policy Statement 2012-13 announced on April 17, 2012. It was indicated that the final guidelines on the implementation of Basel III capital regulations would be issued by end - April 2012. It may be recalled that draft proposals on Basel III capital regulations were issued vide circular DBOD.No.BP.BC.71/ 21.06.201/ 2011-12 dated December 30, 2011.

2. The final guidelines on Basel III capital regulations are enclosed. These guidelines would become effective from January 1, 2013 in a phased manner. The Basel III capital ratios will be fully implemented as on March 31, 2018.

3. The capital requirements for the implementation of Basel III guidelines may be lower during the initial periods and higher during the later years. While undertaking the capital planning exercise, banks should keep this in view.

4. RBI is currently working on operational aspects of implementation of the Countercyclical Capital Buffer. Guidance to banks on this will be issued in due course. Besides, certain other proposals viz. ‘Definition of Capital Disclosure Requirements’, ‘Capitalisation of Bank Exposures to Central Counterparties’ etc., are also engaging the attention of the Basel Committee at present. Therefore, the final proposals of the Basel Committee on these aspects will be considered for implementation, to the extent applicable, in future.

5. For the financial year ending March 31, 2013, banks will have to disclose the capital ratios computed under the existing guidelines (Basel II) on capital adequacy as well as those computed under the Basel III capital adequacy framework.

Yours faithfully,

(Deepak Singhal)
Chief General Manager-in-Charge

Encls: as above


Extract of Paragraph 90 of the Monetary Policy Statement 2012-13

Implementation of Basel III Capital Regulations

90. As indicated in the SQR of October 2011, the Reserve Bank prepared the draft guidelines on Basel III – Implementation of Capital Regulations in India, which were placed on its website in December 2011, for comments/suggestions from various stakeholders. The draft guidelines provide for a roadmap for smooth implementation of Basel III capital regulations in terms of the transitional arrangements (phase-in) of capital ratios and grandfathering (phase-out) of ineligible capital instruments. The Reserve Bank is also in the process of estimating, on the basis of data collected from banks, the likely impact of the proposed Basel III norms on banks’ capital position and leverage. The estimation exercise, as also the comments/suggestions from various stakeholders, will form the basis for finalising the guidelines on capital regulations. It is proposed:

  • to issue the final guidelines on the implementation of Basel III capital regulations by end-April 2012.
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