What changed
This master circular updates the previous July 1, 2010 circular by incorporating instructions issued up to June 30, 2011. It consolidates all relevant circulars listed in Annex 13 into a single reference document.
What it means for you
Banks in India, having migrated to Basel II from March 31, 2009, must continue using Basel I rules to compute a prudential floor—ensuring Basel II capital stays above 80% of Basel I minimum. This circular provides the detailed framework for that floor calculation, including risk weights and capital components.
What you must do
- Ensure Basel II minimum capital requirement exceeds 80% of Basel I minimum capital for credit and market risks.
- Maintain parallel run of Basel I and Basel II calculations until March 31, 2013, subject to review.
- Report capital adequacy in the format prescribed in Annex 12 of this circular.
- Refer to Annex 13 for the list of consolidated circulars to ensure compliance with all prior instructions.
Who it affects
All commercial banks in India (excluding Regional Rural Banks), Treasury and risk management departments, Compliance and regulatory reporting teams
What is the prudential floor under Basel I?
Banks must ensure their Basel II minimum capital requirement is not less than 80% of the minimum capital computed under Basel I for credit and market risks.
Until when is the parallel run required?
The parallel run of Basel I and Basel II calculations continues until March 31, 2013, subject to review by RBI.
Does this circular apply to RRBs?
No, this master circular applies to all commercial banks excluding Regional Rural Banks.