The RBI said in the draft guidelines for implementation of Basel III capital regulation in India that the equity capital of a bank should not be less than 5.5% of risk-weighted loans. It has also suggested for setting up of the capital conservation buffer in the form of Common Equity of 2.5% of RWAs
Mumbai: In order to strengthen risk management mechanism, the Reserve Bank of India (RBI) on Friday issued draft guidelines envisaging that the equity capital of a bank should not be less than 5.5% of risk-weighted loans, reports PTI.
“Common Equity Tier 1 (CET 1) capital must be at least 5.5% of risk-weighted assets (RWAs),” RBI said in the draft guidelines for implementation of Basel III capital regulation in India.
Besides, it also recommends, Tier 1 capital comprising of pure equity and statutory and capital reserves must be at least 7% and total capital must be at least 9% of RWAs.
Besides, it has also suggested for setting up of the capital conservation buffer in the form of Common Equity of 2.5% of RWAs.
It is proposed that the implementation period of minimum capital requirements and deductions from Common Equity will begin from 1 January 2013 and be fully implemented as on 31 March 2017, it said.
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.
The central bank has invited comments and feedback on the draft guidelines, including implementation schedule by 15 February 2012.
RBI governor D Subbarao had said earlier this month that Indian banks will have to incur additional costs to build capital buffers to comply with Basel III rules.
Though the Indian banking sector was comfortably placed to implement Basel III regulations, some banks might need additional capital, he had said.
“On aggregate, banks are comfortably placed in terms of capital adequacy, but a few individual banks may fall short due to implementation of Basel III,” he had said.
Currently, RBI follows Basel II norms under which Tier I component is not only pure equity capital but Perpetual Non-cumulative Preference Shares (PNCPS), Innovative Perpetual Debt Instruments (IPDI) and capital reserves.
Banks are required to maintain a minimum Capital to Risk weighted Assets Ratio (CRAR) of 9% within this Tier 1 capital should be at least 6% of risk weighted assets.
Under the existing capital adequacy guidelines based on Basel II framework, total regulatory capital is comprised of Tier 1 capital (core capital) and Tier 2 capital (supplementary capital).
The draft norms have been adopted from the Basel Committee on Banking Supervision (BCBS) that issued a comprehensive reform package entitled ‘Basel III: A global regulatory framework for more resilient banks and banking systems” in December 2010.
The objective of the draft guideline is to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spill-over from the financial sector to the real economy.
The reform package relating to capital regulation, together with the enhancements to Basel II framework and amendments to market risk framework issued by BCBS in July 2009, will amend certain provisions of the existing Basel II framework, in addition to introducing some entirely new concepts and requirements, it said.
There are 20 nuclear power stations in India with excellent safety record. The establishment often tell us that nuclear reactors in India are designed to withstand natural disasters like earthquakes and tsunamis. So far they are more than vindicated, says Rajan Alexander
The Cyclone Thane that struck the southern coast of India on Friday did not damage the Madras Atomic Power Station (MAPS). In fact, operations at the MAPS, in located at Kalpakkam, 70km from Chennai on the east coast, continued unhindered when the cyclonic storm crossed the TN coast yesterday morning.
There are 20 nuclear power stations in India with excellent safety record. The establishment often tell us that nuclear reactors in India are designed to withstand natural disasters like earthquakes and tsunamis. So far they are more than vindicated, says Rajan Alexander.
He adds that during the massive Gujarat earthquake in 2001, with Bhuj as epicentre, the Kakrapar nuclear power plant was unaffected. In 2004 Tsunami that hit Tamil Nadu and Andhra coasts, the reactors at Kalpakkam were unaffected. Now comes further confirmation that despite the ‘very severe’ Cyclone Thane, the Kalpakkam reactor worked as usual. Surely, Cyclone Thane inflicted a massive blow on the Kudankulam anti-nuclear movement. Let’s hope they fizzle out soon.
Station director of MAPS K Ramamurthy said, “The units experienced slight variations in condenser vacuum due to increase in back pressure caused by high tide and due to ingress of shells and silt. In the last 24 hours, the maximum wind velocity was 45-50 kmph and the rainfall 96.6 mm.”
“As on December 30, MAPS UNIT-2 has completed 305 days of continuous operations” he added.
The cyclonic storm killed at least 33 persons in Tamil Nadu and left a trail of destruction and threw life out of gear in Cuddalore district and adjacent Union Territory of Puducherry.
The cyclonic storm Thane, however, left Andhra Pradesh coast unscathed after keeping everyone in the state on toes for the last two days. The two southern states were on high alert.
Cuddalore was the most affected, with damaged roads making it difficult for rescue teams. Rail services from southern Tamil Nadu were hit as many trains were running late or stopped at nearby stations while flights from Chennai to international destinations were cancelled
Puducherry: Cyclone Thane hit the coast of Tamil Nadu on Friday, making landfall between Puducherry and Cuddalore that has resulted in the death of 19 people so far. So far 12 people have been reported dead in Cuddalore and seven dead in Puducherry, says a blog maintained by Rajan Alexander (http://devconsultancygroup.blogspot.com/2011/12/cyclone-thane-19-dead.html).
Five people died in Cuddalore in incidents of wall collapse and electrocution, officials said. A 45-year old man of Vanarampet village in Puducherry died in house collapse.
The landfall happened very close to Cuddalore, southeast of Puducherry. The system is likely to move westwards and cross north Tamil Nadu coast, close to south of Puducherry, within a few hours and weaken gradually. As a result very heavy rainfall will continue over Northern Tamil Nadu, Puducherry and Rayalseema.
Puduchery District Collector SB Deepak Kumar said that rescue operations were in full swing in the union territory. Uprooted trees were being removed from the roads.
Rail services from southern Tamil Nadu were hit as many trains were running late or stopped at nearby stations while flights from Chennai to international destinations by private carriers including to Kuwait and Malaysia were cancelled.
Cuddalore was the most affected, with damaged roads making it difficult for rescue teams, including those from National Disaster Response Force and fire and rescue services, to reach the cyclone hit fishing hamlets.
District Collector Amuthavalli said even as communication lines remained affected, over 5,000 houses belonnging to fishermen had been damaged.
"We don't know what is happening in the outside world. All that we have been hearing since last night is the howling of the wind. Several trees have fallen down. Even mobile phone signals are not proper," S Ravikumar, a Puducherry resident, was quoted as saying.
Storm surge of about 1.0 to 1.5 meter above the astronomical tide is likely to inundate the low lying areas of Puducherry, Chennai, Tiruvallu, Kanchipuram and Villupuram districts of north Tamil Nadu.
Even after the landfall, the system is likely to maintain its intensity for 12 hours even after landfall weakens gradually. Under its influence rainfall at most places with heavy to very heavy falls at a few places and isolated extremely heavy fall is likely to continue over north Tamil Nadu and Puducherry in next 24 hours.
Eight teams of the National Disaster Management Force (NDRF) have been sent to the coastal areas. Two of these teams will be in Andhra Pradesh, rest six in Tamil Nadu in view of the cyclone warning. Another 15,000 men of the NDRF are on alert.
Schools buildings in Chennai have been turned into shelter homes and the entire city is on high alert.
A weather scientist had earlier said that Cyclone Thane would probably be half in intensity than that of the super-cyclone that struck Orissa in 1999 which packed wind speed of more than 220 km per hour.
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