What changed
Previously, RRBs were only required to disclose CRAR as notes to their balance sheets, with the desired level to be communicated later. Now, RBI has set a specific minimum CRAR of 9% for all RRBs, effective from March 31, 2014, replacing the earlier open-ended disclosure requirement.
What it means for you
RRBs must now actively manage their capital to ensure CRAR stays at or above 9% at all times, which may require raising additional capital or adjusting risk-weighted assets. This move strengthens the capital base of RRBs post-consolidation, aligning them closer to commercial bank norms and enhancing financial stability.
What you must do
- Assess current CRAR levels and plan capital augmentation if below 9% before March 31, 2014.
- Monitor risk-weighted assets and off-balance sheet exposures to maintain ongoing compliance.
- Update internal reporting systems to track CRAR on a continuous basis.
- Coordinate with sponsor banks or government for recapitalization if needed.
Who it affects
All Regional Rural Banks (RRBs), Sponsor banks of RRBs, RBI regional offices overseeing RRBs
What is the new CRAR requirement for RRBs?
RRBs must achieve and maintain a minimum Capital to Risk-weighted Assets Ratio (CRAR) of 9% on an ongoing basis, effective from March 31, 2014.
Does this circular change any other existing norms?
No, the other contents of the earlier circular dated December 28, 2007 remain unchanged.