What changed
The previous Master Circular dated July 1, 2011 has been updated to include all relevant instructions issued up to June 30, 2012. The new circular does not cover Basel III capital regulations announced on May 2, 2012, which will take effect from January 1, 2013 in a phased manner.
What it means for you
Banks must continue to comply with the existing NCAF guidelines for capital adequacy and market discipline as consolidated in this circular. For the financial year ending March 31, 2013, banks are required to disclose capital ratios computed under both the current framework and the upcoming Basel III framework.
What you must do
- Review and implement the updated Master Circular for capital adequacy and market discipline guidelines.
- Ensure compliance with all instructions issued up to June 30, 2012 as listed in Annex 17.
- Prepare for dual disclosure of capital ratios under both NCAF and Basel III for FY 2012-13.
- Monitor RBI website for the full circular and any subsequent clarifications.
Who it affects
All Scheduled Commercial Banks (excluding Local Area Banks and Regional Rural Banks), Risk management and compliance departments, Finance and capital planning teams
Does this circular replace the Basel III guidelines?
No, this circular explicitly excludes Basel III capital regulations. Basel III will become effective from January 1, 2013 in a phased manner.
What disclosure requirements apply for FY 2012-13?
Banks must disclose capital ratios computed under both the existing NCAF framework and the Basel III Capital Adequacy Framework for the financial year ending March 31, 2013.
Where can I find the full updated Master Circular?
The circular has been placed on the RBI website at http://www.rbi.org.in. It consolidates instructions issued up to June 30, 2012.