BANKING POLICIES

BANKING POLICIES

RBI for more Tier-1 capital adequacy then Basel III norms : To help sustain the healthy financial profiles of Indian Banks, RBI is expected to prescribe higher capital adequacy norms vis-a-vis those proposed under the Basel-II framework. RBI had proposed that the common equity Tier-I capital should be at least 5.5% of Risk Weighted Assets (RWAs) vis-a-vis 4.5% prescribed by Basel-III norms. Now, RBI has proposed Tier-I capital of at least 7% and wants total capital to be kept at least 9%. It has also proposed a capital conservation buffer viz. Common equity of 2.5% of RWAs.

New supervisory action structure for UCB's unveiled 

RBI has unveiled a revised supervisory Action Framework for Urban Co-operative Banks (UCBs) whereby in the initial stage of deterioration in their financial position, self-corrective action by banks' management is envisaged. Despite that, if their financials still do no improve, RBI will step in and initiate supervisory action as it deems necessary. Under RBI supervision, the UCBs would be required to submit an action plan to RBI for improving their performance in the specific areas where there is a deterioration or concern. The next stage would include pre-emptive action aimed at arresting any further deterioration.

RBI to monitor banks' global books 


RBI will now inspect the overseas operations of Indian Banks as it does for the local business; to ensure that events outside the nation do not rock the domestic business. The inspection will review whether a bank is following all the regulator's norms in letter and spirit. It will also point out where the bank has faltered and how those issues can be rectified. It will also ensure that Indian banks elsewhere follow local rules to prevent any slips in compliance.

FVCIs can dabble in securities via secondary market 

RBI has allowed Foreign Venture Capital Investors (FCVI) to invest in securities through the secondary market and also through private arrangements or purchase from a third party. The move is expected to bring several VC investors to India's debt and equities market. The eligible securities include equity, equity-linked instruments, debt and debt instruments, debentures of a domestic venture capital undertaking or VC funds, units of Schemes/funds set up by a VC fund.