Master Circular - Prudential Guidelines on Capital Adequacy and Market Discipline – New Capital Adequacy Framework (NCAF)
RBI/2009-10/308
DBOD.No.BP.BC. 73 /21.06.001/2009-10
February 8, 2010
All Scheduled Commercial Banks
(Excluding Local Area Banks and Regional Rural Banks)
Dear Sir,
Master Circular - Prudential Guidelines on Capital Adequacy and Market Discipline – New Capital Adequacy Framework (NCAF)
Please refer to paragraphs 153 and 154 of Second Quarter Review of Monetary Policy 2009-10 announced on October 27, 2009 on Enhancement to Basel II Framework (extract annexed). Accordingly, ‘Prudential Guidelines on Capital Adequacy and Market Discipline – New Capital Adequacy Framework (NCAF), issued vide Master Circular DBOD No. BP.BC.21//21.06.001/2009-10 dated July 1, 2009 has been updated in line with the changes made by the Basel Committee on Banking Supervision (BCBS) to the Basel II Framework. The additions have been indicated in bold italics and deletions in bold strikethrough.
2. The changes in Pillar 1 are mainly aimed at increasing the capital requirements for specific risk and liquidity facility for securitisation exposures. The revised guidance on Pillar 2 is intended to assist banks in better identifying and appropriately capturing risks in their internal assessments of capital adequacy and managing risks. The Pillar 3 revisions include more granular disclosure requirements for credit risk mitigations and securitised exposures. The guidance also includes references, as examples, to activities/products not used by our banks.
3. The Enhancement to Basel II Framework will be effective from March 31, 2010.
4. This Master Circular also integrates other changes in the NCAF effected after the date of the last Master Circular i.e. July 1, 2009, which are listed in Annex 17.
Yours faithfully,
(B.Mahapatra)
Chief General Manager
Encls: as above
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