Basel III Capital Regulations- RBI Notification
Basel III Capital Regulations – Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas
Please refer to paragraph 1.16 of Annex 4 (Criteria for Inclusion of Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital) to the Master Circular Ref DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on ‘Basel III Capital Regulations’ and the circular Ref. DBR.BP.BC.No.28/21.06.001/2016-17 dated November 3, 2016 on Issue of Rupee Denominated Bonds Overseas.
2. Several banks have approached us to clarify the amount of capital funds that can be raised overseas. The issue has been examined and it is clarified that the “eligible amount” for purpose of issue of PDIs in foreign currency as per para 1.16 (ii) of Annex 4 to the Master Circular dated July 1, 2015 referred to above, would mean the higher of:
(a) 1.5% of Risk Weighted Assets (RWAs) and
(b) Total Additional Tier 1 capital
as on March 31 of the previous financial year.
Not more than 49% of the “eligible amount” as above can be issued in foreign currency and/or in rupee denominated bonds overseas.
3. Accordingly, the sub para (ii) of paragraph 1.16 of Annex 4 to the Master Circular dated July 1, 2015 referred to above is amended as indicated in Annex 1 enclosed herewith. An illustration is enclosed in Annex 2 for greater clarity.
4. All the other terms of the Master Circular on Basel III Capital Regulations dated July 1, 2015, referred to above, as amended from time to time, shall remain unchanged. The issuances as above shall be subject to all applicable prudential norms and FEMA guidelines.
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