RBI defers last tranche of CCB to October 2021

What changed

The implementation of the last 0.625% tranche of the Capital Conservation Buffer (CCB) has been deferred from April 1, 2021 to October 1, 2021. The minimum capital conservation ratios specified in the Master Circular on Basel III Capital Regulations will continue to apply until the CCB reaches 2.5% on the new date. The pre-specified trigger for loss absorption through conversion or write-down of Additional Tier 1 instruments remains at 5.5% of risk-weighted assets until October 1, 2021, after which it will increase to 6.125%.

What it means for you

Banks get additional six months to build up the full 2.5% CCB, easing capital pressure amid COVID-19 stress. This deferral supports recovery by allowing banks to conserve capital for lending rather than meeting an earlier deadline. The AT1 trigger adjustment from October 1, 2021 will require banks to ensure adequate common equity to avoid conversion risks.

What banks were required to do at the time

• Update internal capital planning to reflect CCB reaching 2.5% by October 1, 2021 instead of April 1, 2021.
• Maintain minimum capital conservation ratios as per existing framework until the new deadline.
• Monitor AT1 instruments and ensure CET1 ratio stays above 5.5% of RWAs until September 30, 2021, and above 6.125% from October 1, 2021.
• Communicate revised timelines to treasury and risk management teams for capital adequacy planning.

Who it affects

All commercial banks (excluding Small Finance Banks, Payments Banks, RRBs, and LABs), Risk management departments, Treasury and capital planning teams