What changed
The Reserve Bank of India (RBI) has issued directions on capital adequacy for payments banks, outlining prudential norms under Section 35A of the Banking Regulation Act, 1949. The directions specify components of regulatory capital, limits and minima, treatment of risk-weighted assets, and leverage ratio framework.
What it means for you
These directions are crucial for payments banks to maintain adequate capital levels, ensuring they can withstand potential losses and maintain confidence in the banking system, as per the RBI's public interest and banking policy objectives.
What you must do
- Payments banks must maintain adequate capital levels as per the specified prudential norms.
- Banks must calculate risk-weighted assets (RWAs) accurately and maintain a leverage ratio framework.
- Banks must report capital issuances and investments in accordance with the specified formats.
Who it affects
Payments banks
What are the key components of regulatory capital?
The key components of regulatory capital are Common Equity Tier 1 (CET 1) Capital, Additional Tier 1 (AT 1) Capital, and Tier 2 capital, as per Chapter II of the Directions.
How will the RBI monitor compliance with these directions?
The source does not specify monitoring methods; it only outlines the directions.
What is the effective date of these directions?
These directions shall come into effect immediately upon issuance, as per Chapter I A 2.