RBI guidelines on Basel III more conservative: Moody’s

 

“We interpret RBI’s draft guidelines as more conservative than the Bank for International Settlements norms and view them as credit positive for the banking sector,” Moody’s Weekly Credit Outlook said

New Delhi: Rating agency Moody’s on Monday said the Reserve Bank of India’s (RBI) draft guidelines for adoption of Basel III norms, which seek to raise the minimum equity capital of banks, are more ‘conservative’ than those proposed globally, reports PTI.

“We interpret these draft guidelines as more conservative than the Bank for International Settlements (BIS) norms and view them as credit positive for the banking sector,” Moody’s Weekly Credit Outlook said.

In order to strengthen risk management mechanism, RBI issued draft guideline last month.

RBI has recommended a more stringent minimum common equity Tier-I capital of 5.5% against BIS’ 4.5%, it said.

Besides, it said, the central bank has proposed an earlier deadline for the implementation of a 2.5% capital conservation buffer to March 2017, as compared to BIS’ deadline of January 2019.

The draft guidelines reflect the RBI’s policy of ensuring Indian banks have extra stress-absorption capacity if the operating environment worsens, it said.

The proposed guidelines also prompt banks that have used hybrid securities and other innovative debt capital instruments to raise their core equity capital.

In line with BIS norms, it said, the proposed guidelines also focus on quality of capital, with increased emphasis on the loss-absorption capacity of capital rather than its role in supporting business growth.

Under the proposed guidelines, hybrids and other forms of innovative debt capital instruments that banks currently classify as Tier-I capital will no longer qualify as it, owing to their limited loss absorption capacity, it said.

In addition, it said, the proposed guidelines end the practice of making a distinction between upper Tier-II debt capital instruments and subordinated debt in favour of one set of criteria from a capital regime perspective.

Last month, RBI unveiled draft guideline for adoption of Basel III norms and set implementation period of minimum capital requirements to begin from 1 January 2013.

However, it said, the capital conservation buffer requirement is proposed to be implemented between 31 March 2014 and 31 March 2017.

It also said that the instruments which no longer qualify as regulatory capital instruments will be phased out during the period beginning from 1 January 2013 to 31 March 2022.

 

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Telcos oppose giving 3G pact copy to DoT on fear of leakage of info

During the proceedings on Monday telecom operators opposed the oral assurance given by DoT officials that confidentiality of their agreement would be maintained and said “it would be highly unfair to them”

New Delhi: In a fresh tussle, the Department of Telecom (DoT) has requested the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) to give it copies of agreements on third generation (3G) roaming among private operators, a move opposed by them fearing leakage of commercial information to rivals, reports PTI.

The operators suspect that their roaming agreements, which consist of commercial negotiations would be leaked from the DoT and would reach rivals.

The information is getting leaked like a sea. It would be highly unfair for operators. “The moment it is leaked, it would reach our rival operators,” said the counsel appearing for telecom firms.

Senior advocate CS Vaidyanathan appearing for one of the telecom operators asked the tribunal to direct DoT to file an application and they would file a proper reply on this issue.

TDSAT said it would decide on this issue on 17th January only after considering the DoT’s plea questioning its jurisdiction to decide on 3G roaming issue.

Meanwhile, TDSAT adjourned Monday’s scheduled hearing to 17th January on the plea of DoT challenging its jurisdiction to decide the 3G roaming issue after the government wanted to file rejoinder over the reply submitted by operators.

In their reply, operators Airtel, Vodafone, Idea, Aircel and Tata Tele had termed DoT’s move as “desperate attempt to avoid adjudication” on the 3G dispute.

During the proceedings on Monday operators also opposed the oral assurance given by DoT officials that confidentiality of their agreement would be maintained and said “it would be highly unfair to them”.

“If they want a copy, let them file a proper application and then we would file our objection,” said Mr Vaidyanathan.

However, DoT’s counsel said that as per their license conditions, operators are supposed to handover their roaming agreement and they have already handed it to sectoral regulator TRAI.

“What is the difficulty in giving it to us (DoT). We are a licensor and not a third party in this. They (operators) have already given it to the TRAI,” said DoT’s counsel Maneesha Dhir, adding that it was only for the purpose of preparing a consolidated reply for the main petition.

She assured the confidentiality would be maintained and sensitive information would not be given under the RTI Act.

Earlier on 3rd January, operators had submitted their agreement to the TDSAT in sealed covers and the tribunal had permitted the government to inspect the agreement through their counsels.

However, DoT submitted that agreements were “voluminous and technical” and requested TDSAT for proper copies of the agreement.

Passing an order on 24th December, the tribunal had directed the DoT not to take any coercive action against the telecom operators.

A day prior to that the government had asked five telecom operators to stop their inter-circle roaming on 3G bandwidth within 24 hours and it was challenged by Airtel, Vodafone, Idea, Aircel and Tata Tele before TDSAT.

 

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Cairn-Vedanta deal: Oil ministry seeks fresh Cabinet nod

The home ministry had on 25th November pointed to eight instances of the mining group or its affiliates being involved in cases of default of payment, human rights violations or environmental damage. This has led the oil ministry to seek a fresh Cabinet nod for the deal

New Delhi: The $8.48-billion Cairn-Vedanta deal may have concluded and all government pre-conditions met, but the oil ministry has approached the Cabinet again for a fresh approval in view of the home ministry pointing to the alleged global and domestic ‘transgressions’ by the Vedanta group, reports PTI.

The home ministry, giving its security clearance for Vedanta buying majority stake in Cairn India, had on 25th November pointed to eight instances of the mining group or its affiliates being involved in cases of default of payment, human rights violations or environmental damage.

Sources said the oil ministry approached the Cabinet Committee on Economic Affairs (CCEA) “to bring on record” the transgressions pointed by the home ministry.

“The material provided by the ministry of home affairs has no bearing whatsoever on the security aspects,” the note to the CCEA states.

Sources said the ministries of finance and law, in their comments on the note, have given a no-objection to the deal.

Comments of ministries of corporate affairs and environment as well as Planning Commission are still awaited, they said adding the issue may come up before the CCEA later this month.

The planned sale of 40% shares held by Cairn Energy Plc in Cairn India to Vedanta was first considered by the CCEA in April last year and approved in June, 2011 with certain conditions.

Cairn and Vedanta complied with all the pre-conditions and concluded the transaction last month.

The CCEA note points out that all approvals and pre-conditions for the share transfer had been achieved with the last one from state-owned Oil and Natural Gas Corporation (ONGC) on 1st December.

ONGC, which holds stake in eight out of the 10 properties of Cairn India, conveyed its ‘no-objection’ to the deal after Cairn agreed to include royalty payment in Rajasthan oil block as “a cost recoverable item since commencement of production” and to pay the cess “in proportion to their respective participating holdings”.

Cost recovery of royalty and cess payments were among the pre-conditions that the government had set for giving clearance to the transaction.

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