Basel I Capital Adequacy Norms for Local Area Banks
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2013-14/71 · issued 01 Jul 2013 · ~2 min read
Quick answerRBI's July 2013 master circular consolidates Basel I capital adequacy rules exclusively for Local Area Banks (LABs), as scheduled commercial banks (excluding RRBs) have moved to Basel II. LABs must continue following these prudential norms on capital components, risk weights, and capital charges.
What changed
This master circular updates the previous July 2012 version by incorporating instructions issued up to June 30, 2013. The key change is that the circular now applies only to Local Area Banks (LABs), as scheduled commercial banks (excluding RRBs) have been withdrawn from the Basel I framework following the parallel run and prudential floor removal in May 2013.
What it means for you
LABs must continue to comply with Basel I capital adequacy norms, including maintaining minimum capital against credit and market risks using prescribed risk weights. This circular consolidates all relevant instructions, so LABs should refer to this single document for their capital adequacy requirements. Scheduled commercial banks (excluding RRBs) are no longer bound by this framework.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Review and ensure compliance with the consolidated Basel I capital adequacy norms as per this master circular.
Update internal policies and procedures to reflect that this circular applies only to LABs, not to other scheduled commercial banks.
Verify that capital components (Tier I and Tier II) meet the prescribed definitions and conditions outlined in the annexes.
Compute capital adequacy ratio (CRAR) using the risk weights and capital charge methods specified in the circular.
Maintain documentation for audit and regulatory reporting purposes, referencing this master circular.
Who it affects
Local Area Banks (LABs), RBI supervisory teams monitoring LABs, Compliance officers of LABs
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 14:36 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does this master circular apply to all commercial banks?
No, it applies only to Local Area Banks (LABs). Scheduled commercial banks (excluding RRBs) have been withdrawn from the Basel I framework since May 2013.
What is the purpose of this master circular?
It consolidates all instructions on prudential norms for capital adequacy under Basel I, covering components of capital, risk weights for assets and off-balance sheet exposures, and capital charges for credit and market risks.
What should LABs do if they have questions about specific capital instruments?
Refer to the detailed annexes in the circular, which provide terms and conditions for instruments like perpetual non-cumulative preference shares, innovative perpetual debt, and subordinated debt.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1089: DBOD.No.BP.BC.21/21.01.002/2013-14 — "Master Circular - Prudential Norms on Capital Adequacy - Basel I Framework" dated July 1, 2013”
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/71
DBOD.No.BP.BC. 21/21.01.002/2013-14
July 1, 2013
All Local Area Banks
Dear Sir,
Master Circular - Prudential Norms on Capital Adequacy - Basel I Framework
Please refer to the Master Circular No. DBOD.BP.BC.15/21.01.002/2012-2013 dated July 2, 2012 consolidating instructions / guidelines issued to commercial banks (including LABs) till June 30, 2011 on matters relating to prudential norms on capital adequacy under Basel I framework. The Master Circular has been suitably updated by incorporating instructions issued up to June 30, 2013 and has also been placed on the RBI web-site ( http://www.rbi.org.in ).
2. The stipulation of parallel run as well as the prudential floor, to all commercial banks (excluding LABs and RRBs), for implementation of Basel II vis-à-vis Basel I Framework has since been withdrawn vide circular DBOD.BP.BC.No. 95/21.06.001/2012-13 dated May 27, 2013 . Consequently, this Master Circular is no more applicable to scheduled commercial banks (excluding RRBs). This Master Circular contains instructions that are relevant and applicable to Local Area Banks (LABs) only.
3. It may be noted that all relevant instructions on the above subject contained in the circulars listed in the Annex 11 have been consolidated.
Yours faithfully,
(Chandan Sinha)
Principal Chief General Manager
Master Circular on ‘Prudential Norms on Capital Adequacy- Basel I Framework’
Table of Contents
S. No.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/71 · issued 01 Jul 2013. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8133&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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