RBI/2009-10/385
DBOD. BP.BC.No.87/21.06.001 / 2009-10
April 7, 2010
All Scheduled Commercial Banks
(excluding Local Area Banks and Regional Rural Banks)
Dear Sir,
Prudential Guidelines on Capital Adequacy and Market Discipline –
New Capital Adequacy Framework (NCAF) - Parallel run and prudential floor
Please refer to
paragraph 2.4 of our Master Circular dated February 8, 2010 on
the captioned subject in terms of which the banks were advised to have parallel
run of the revised framework along with the then current framework (Basel I).
Further, in terms of paragraph 4.1.2 ibid the banks were also advised that the
minimum capital maintained by them shall be subject to the prudential floors
indicated therein.
- On a review of the implementation so far, it has been decided to continue
with the prudential floor until further advice. Accordingly, the foreign banks
in India and Indian banks having operational presence outside India would
continue to have the parallel run beyond the specified date (i.e., March 31,
2010) and ensure that their Basel II minimum capital requirement continues to be
higher than 80 % of the minimum capital requirement computed as per Basel I
framework for credit and market risk.
- All other commercial banks (except LABs and RRBs) would also continue to
ensure compliance with the prescribed prudential floor in terms of paragraph
4.1.2 of the Master Circular on NCAF.
- All other guidelines contained in paragraph 2.4 of the aforesaid circular on
parallel run should be adhered to by all the banks.
Yours faithfully,
(B Mahapatra)
Chief General Manager