What changed
The final 0.625% tranche of the CCB, originally due on September 30, 2020, is now deferred to April 1, 2021. The pre-specified trigger for loss absorption via conversion/write-down of Additional Tier 1 instruments remains at 5.5% of RWAs until April 1, 2021, when it will rise to 6.125%.
What it means for you
Banks get additional time to build capital buffers amid COVID-19 stress, easing immediate pressure on capital ratios. The deferral allows lenders to conserve capital for provisioning and lending without triggering automatic restrictions on distributions.
What you must do
- Update internal capital planning models to reflect CCB implementation date of April 1, 2021.
- Communicate the revised CCB timeline to board and risk committees.
- Monitor capital conservation ratios as per existing framework until CCB reaches 2.5%.
- Prepare for the AT1 trigger increase to 6.125% of RWAs from April 1, 2021.
Who it affects
All commercial banks (excluding SFBs, payment banks, RRBs, and LABs), Bank treasury and capital management teams, Risk and compliance departments
What is the new deadline for the final CCB tranche?
The last 0.625% tranche of the CCB is now due on April 1, 2021, instead of September 30, 2020.
Does this change affect the AT1 trigger for loss absorption?
Yes, the trigger remains at 5.5% of RWAs until April 1, 2021, after which it will increase to 6.125%.
Which banks are covered by this circular?
All commercial banks except Small Finance Banks, Payment Banks, Regional Rural Banks, and Local Area Banks.