basel iii, indian policy

7/29/2019 Basel III, Indian Policy

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Basel III not so onerous, provided

Additional Tier I debt finds takers

Contacts:

Vibha Batra

[email protected]

+91-124-4545302

Karthik Srinivasan

[email protected]

+91-22-30470028

Puneet Maheshwari

[email protected]

+91-124-4545348

Guidelines on the implementation of BASEL III Capital Regulations werereleased by the Reserve Bank of India (RBI) on May 2, 2012.Implementation of these guidelines will begin January 1, 2013 and theprocess will be completed by March 31, 2018. Key Highlights of theguidelines are as follows:

Banks are required to maintain a minimum 5.5% in common equity(as against the current 3.6%) by March 31, 2015

Banks to create a capital conservation buffer (consisting of commonequity) of 2.5% by March 31, 2018

Banks to maintain a minimum overall capital adequacy of 11.5%(against the current 9%) by March 31, 2018

Conditions are stipulated to increase the loss absorption capacity ofbanks Additional Tier I capital; Banks not to issue additional Tier Icapital to retail investors

Risk-based capital ratios to be supplemented with a leverage ratioof 4.5% during parallel run

Banks are allowed to add interim profits (subject to conditions) forcomputation of core capital adequacy

Banks to deduct the entire amount of unamortised pension andgratuity liability from common equity Tier I capital for the purpose of

capital adequacy ratios from January 1, 2013.

RBIs guidelines are more stringent than the guidelines of the BASELCommittee on Banking Supervision (BCBS) in the following areas:

Higher common equity capital requirement (5.5% as against 4.5%required under Basel III) and overall capital adequacy (9% asagainst 8%)

Stricter leverage ratio -4.5% for Indian banks (during parallel run)as against 3% required by BCBS.

ICRA views the suggested measures as credit positive for banks, as theseraise the minimum core capital stipulation, introduce counter-cyclicalmeasures to enhance the ability of banks to conserve core capital beforestress sets in; and also seek to increase the loss absorption capacity of

Additional tier I capital instruments in the event of stress. These measuresare likely to improve the ability of banks to withstand periods of economicand financial stress (by building cushions during good times) and alsoenhance their ability to lend in the crucial period of recovery post stress. Theprescribed stricter leverage requirement, which is not based on riskweighted assets, is aimed at preventing the build-up of excessive on and off-balance sheet leverage.

ICRA

Rating

Feature


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ICRA Rating Feature Basel III Guidelines

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A summary of the impact of Basel III on banks is as follows:

Sizeable capital requirement

The higher capital norms, as suggested by the RBI under Basel III, would necessitate raising of asubstantial amount of equity and other tier 1 capital. Indian banks would need to raise additional capital

of about Rs. 3.95 trillion over FY 2013 to FY 2018, comprising common equity, additional tier I capitaland tier II capital of Rs. 1.3-2.0 trillion, Rs. 1.9 trillion and Rs. 1 trillion, respectively.

A sizeable part of the common equity requirement (around 80%) relates to Public Sector Banks(PSBs). Of the total equity requirement of PSBs, the share of the Government of India (GOI) would beabout Rs. 0.3 to 0.8 trillion (going by the Union Finance Ministrys current stance of maintaining 58%shareholding in PSBs). The incremental equity requirement appears manageable, considering pasttrends in capital mobilisation. Indian banks raised over Rs. 1 trillion in equity during the period from FY2008 to FY 2012, of which around 54% was mobilised by PSBs and 46% by private banks. However, ifone were to exclude FY 2008, when some large banks took advantage of the buoyancy in the capitalmarkets to raise around Rs. 0.5 trillion, the equity raised by Indian banks over the four years from FY2009 to FY 2012 was around Rs. 0.5 trillion; of this, around 60% was infused by the GoI/Life InsuranceCorporation.

While the equity target may appear easy at first glance, it may not prove to be so eventually, given thatthe RBI has also introduced loss-absorption features in Additional Tier I capital instruments. Thesefeatures could well limit investor appetite for these instruments, as it would be difficult to assess theprobability of their conversion into equity or of a principal write-down in a stress scenario (and theextent of the resultant loss). In case banks are unable to mobilise the required Additional Tier I and thegap is bridged by raising common equity, the incremental equity requirement may go up to as high asRs. 2.94 trillion over the period from FY 2013 to FY 2018; of which the share of the GoI could be astaggering Rs. 1.2-1.7 trillion.

Large Number of PSBs may be need to shore up core capitalThe quality of capital for Indian banks has been deteriorating over the last five years with the corecapital percentage declining from 75% to 64%. However, the situation is likely to get reversed, withexcess Additional Tier I and Tier II capital to be recognised in the same proportion as the increase in

common equity capital. This would ensure a minimum 70% core capital level, while restricting Tier II tojust 17%. In ICRAs view, the higher level of capital thus achieved, besides the improvement in thequality of capital, would be a credit positive for banks.

Increase of 25-30 bps in lending yields may help most banks protect their return on equityAs of December 31, 2011, around 15 PSBs had less than 8% core Tier I capital and of these eight hadless than 7%. When banks with low core Tier I shore up their capital to around 9% (required 8% + 1%cushion), their return on equity (ROE) could drop by 1-4%, which they could seek to compensate byraising their lending yields (as long as competitive forces allow them to do so), increasing fee income,or rationalising costs. On the whole, the lending yields may go up by 25-30 bps because of highercapital requirements under Basel III, thereby limiting the impact on ROE to just 1-2% for the not so wellcapitalised banks.


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Key Changes under Basel III

Higher core capital requirement

The Basel III guidelines of RBI mandate a common equity tier I capital of 8%, 1% higher than the BCBSBasel III guidelines and much higher than existing RBI norms. Additionally, banks will also be required tomaintain counter cyclical capital (0-2.5%, in the form of common equity tier I capital) during the periods of

excessive credit growth.

Table 1: Comparison on capital requirementBASEL IIIguidelines -BCBS

BASEL IIIguidelines-RBI

Existing RBInorms

Currentlevel ofPSBs (Dec-11)

Currentlevel ofprivatebanks(Dec-11)

Minimum common equity Tier Iratio

4.5% 5.5% 3.6% 7.3%

11.2%

Capital conservation buffer(comprised of common equity)

2.5% 2.5% - - -

Minimum common equity Tier I

ratio (including capitalconservation buffer)

7.0% 8.0% 3.6% 7.3% 11.2%

Additional Tier I capital 1.5% 1.5% 2.4% 0.8% 0.3%

Minimum Tier I capital (includingcapital conservation buffer)

8.5% 9.5% 6.0% 8.1% 11.5%

Minimum total capital ratio

(including capital conservationbuffer)

10.5% 11.5% 9.0% 12.1% 15.9%

Additional counter cyclical bufferto be maintained in the form ofcommon equity capital

0-2.5% 0-2.5% Nil NA NA

Source: BCBS Documents, RBI, Websites of banks and ICRA Research

As seen from Table 1, RBI has kept the minimum capital adequacy requirement higher by 1% as comparedto International standards. On an aggregate basis, PSBs have marginally lower common tier I capital thanthe requirement; however, the gap would disappear on adding the interim profits. However, there are sharpdifferences amongst various banks. As for additional tier 1 capital, PSBs do have 0.8% as on December31, 2011, but a large part of it will have to be phased out as these instruments have step up clauses/ calloptions, which are disallowed under Basel III.

1Improves by around 70-80 bps to 8%, if 9M FY 2012 profits are added in core capital for capital

adequacy calculations2 Including Tier II capital


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Stricter norms for regulatory adjustments/ deductions

Changes in Standard DeductionsThe Basel III guidelines suggest changes in the deductions made for the computation of core capital andoverall capital adequacy computations. The key changes for Indian banks include the following:

Table 2: Deductions from Capital Basel III Guidelines Vs. Existing RBI Norms

BASEL III guidelines-RBI Existing RBI norms ImpactLimit on deductions Deductions to be made only if

deductibles exceed 15% of corecapital at an aggregate level, or10% at the individual item level.

All deductibles to bededucted

Positive

Deductions from Tier Ior Tier II

All deductions from core capital 50% of the deductions fromTier I and 50% from tier IIcapital (except DTA andintangible assets wherein100% deduction is donefrom Tier I capital

Negative

Treatment of significantinvestments in common

shares ofunconsolidated financialentities

Aggregated total equityinvestment in entities where

banks own more than 10% ofshares-(i) Less than 10% of bankscommon equity 250% riskweight(ii) More than 10% will bededucted from common equity.

For investments up to:(i)30%: 125% risk weight or

risk weight as warranted byexternal rating(i)30-50%: 50%deductionfrom Tier I and 50% fromTier II

Negative

Source: BCBS Documents and RBI

Enhancement in loss absorption capacity of non-equity tier I capital of banks

The RBI has introduced loss-absorption features in Additional Tier I capital instruments, which meansthese instruments should be able to absorb loss either through:(i) Conversion to common shares at an objective pre-specified trigger point or

(ii) A write-down mechanism that allocates losses to the instruments at a pre-specified trigger point

The capital instruments with this clause are likely to increase the downside risk for potential investors;therefore, the risk premium could go up and increase the cost of non common equity tier I capitalinstruments. Moreover, the price discovery may not be easy, as it could be difficult to assess theprobability of conversion to equity or a principal write-down and the extent of loss after the event. Further,considering the riskier nature of these instruments, there may be a wider notching in the credit rating ofsuch instruments as compared to the existing capital instruments.

Further, given that such features make the instruments quite complex and even risky, the RBI has notallowed banks to issue Additional Tier I capital to retail investors, which in ICRAs view, is a prudent step.

Enhanced capacity to conserve capital through deferral clause

As per the RBI, banks are required to maintain a capital conservation buffer of 2.5%, comprising commonequity tier 1 capital, which is above the regulatory minimum capital requirement of 9%. There arerestrictions to distribute capital (that is, pay dividends or bonuses in any form) in case conservation capitallevel falls below 2.5%.

However, the RBI may allow some distribution of earnings by the banks, which are in breach of theproposed capital conservation buffer. If a bank wants to make payments in excess of the amount that thenorm on capital conservation allows, it would have the option of raising capital for such excess amount.This issue would be discussed with the banks supervisor as part of the capital planning process.


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Table 3: Illustration on Distributable Earnings in Various ScenariosActual conservation capital aspercentage of requiredconservation capital

Maximum Permissible earningsthat can be distributed in thesubsequent financial year

< 25% 0%

25% - 50% 20%

50% - 75% 40%

75% - 100% 60%>100% 100%

Source: RBI

Restrictions on dividend distribution and bonuses during the time of stress would help banks conserveinternal capital. Please refer to Annexure 3 for an illustration on the same.

Stricter Leverage Ratio

Under the Basel III guidelines of BCBS, a new parameter of leverage ratio was introduced. Under theBCBS guidelines, the leverage ratio is kept at 3% during the parallel run period from January 2013 toJanuary 2017. The RBI norms are stricter in this regard, as the leverage ratio has been kept at 4.5%.However, as per the RBI report, the average leverage ratio of SCBs in India is above 4.5% as of now and

hence stricter leverage ratio would not affect the growth of the banking system, although a few banks mayhave lower leverage ratio and thus may need to reduce the growth to improve leverage ratio.

Inclusion of interim profits will give some respite to banks

Earlier, the RBI did not allow interim profits to be added in capital for capital adequacy computation (unlessthey were audited). The RBI now allows banks to reckon profits in the current financial year for capitaladequacy calculation on a quarterly basis, subject to no significant volatility in incremental credit provisions.As per the revised regulations, in case the incremental provisions made for non-performing assets in any offour quarters of the previous financial year have not deviated more than 25% from the average of the fourquarters, the following amount can be added in the core capital:

Eligible Amount = Profit for the period minus Prorata dividend3

3Based on average annual dividend payout for last three financial years


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Impact of Basel III implementation

Large number of PSBs may need to shore up core capital

As shown in Table 1, under the BASEL III guidelines, the regulatory capital requirement for Indian bankswill increase. As on December 31, 2011, the core capital level of Indian banks on an aggregate basis was

marginally higher than minimum core capital requirement. However, the overall tier I capital was marginallylower than minimum tier I capital requirement.

Within the banking sector, core capital and tier I capitalisation levels of PSBs are relatively lower andcurrently fall short of the new requirement by around 0.70%. As seen from Chart 1, around 15 public sectorbanks fall short of minimum core capital requirement of BASEL III. However, including 9M, FY 2012 profits,the core capital of PSBs improves and is close to the minimum regulatory requirement, althoughdifferences across banks exist.

Despite seemingly comfortable core Tier 1 capital numbers for the system as a whole, the actualrequirement/mobilisation of fresh capital may be much larger, as there are differences between banks andalso on account of the following:

Banks usually maintain some cushion over the minimum regulatory requirement. Under Basel III,the penalties for breaching capital adequacy norms are harsh such as restriction on distribution ofprofits or write down or conversion of non-common equity capital instruments (such as PNCPS

and IPDI) into common shares at pre-specified trigger point. Therefore the incentive to maintaincushion would be still high.

Indian banks are estimated to carry un-provided pension/ gratuity liability of around Rs. 150 billionon March 31, 2012 which will be deducted from common equity Tier I capital for the purpose ofcapital adequacy ratios from January 1, 2013.

Systemically important banks (with asset size of more than USD 100 billion or around Rs. 5.2trillion), which would cover the likes of State Bank of India, Punjab National Bank, Bank of Baroda,Bank of India, Canara Bank, ICICI Bank, HDFC Bank and Axis Bank, would have to maintainhigher capital for the risk of interconnectedness among larger financial firms. This is planned to becaptured through a prescription of 25% adjustment to the asset value correlation (AVC) under IRBapproaches to credit risk.

RBI may introduce countercyclical capital buffer (0-2.5%).

Most of the existing Additional Tier I capital of PSBs will have to be phased out (and, therefore,would need to be replaced) as these have a step-up clause/call option.

0

1

2

3

4

5

6

7

8

Less than5%

5% - 6% 6%- 7% 7% - 8% 8% - 9% More than9%

Numberofbanks

Common equity %

Chart 1: Common Equity in Relation to Risk Weighted Assets of PSBs

Source: Results Release, Basel II Disclosure of Banks and ICRA Research


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Chart 2: Fresh Equity Required (Rs billion) by Bankstill March-2018 at Various Levels of Common Equity

Source: Results Release of Banks, ICRA Research

Chart 3: Equity Capital Mobilised (Rs billion) byIndian Banks

0

100

200

300

400

500

600

2007-08 2008-09 2009-10 2010-11 2011-12

0

500

1000

1500

2000

2500

8% 8.5% 9% 9.5%

In the absence of demand for Additional Tier 1 capital, banks may have to raise common equitycapital to maintain tier I capital required.

In terms of Pillar 2 requirements of the New Capital Adequacy Framework, banks are expected tooperate at a level well above the minimum requirement.

Incremental equity requirements appear achievable so long as banks can find investors for the

riskier Additional Tier I capitalIndian banks would need capital of Rs. 3.95 trillion over FY 2013 to FY 2018, out of which therequirements for common equity, Additional Tier I and Tier II would be Rs. 1.3-2.0 trillion, Rs. 1.9 trillionand Rs. 1 trillion, respectively.

Table 4: Incremental Capital Requirement Vs. Capital Raised in the Past

Common Equity Common Equity + Additional Tier 1

RequirementGovt'sshare

Mobilizedin last fiveyears Requirement

Govt'sshare

Mobilized inlast fiveyears

At minimumregulatoryrequirement

1.0 0.3

1.1

2.9 1.2

1.4At 0.5% buffer 1.3 0.4 3.2 1.3

At 1% buffer 1.6 0.6 3.6 1.5

At 1.5% buffer 2.0 0.8 4.0 1.7

Note: Amounts in Rs. TrillionSource: Websites/Annual accounts of various banks, ICRA Research

A sizeable part of the common equity requirement (around 80%) relates to PSBs. Of the total equityrequirement of PSBs, the share of the GoI would be Rs. 0.3 to 0.8 trillion (going by the Union FinanceMinistrys current stance of maintaining 58% shareholding in PSBs). The incremental equity requirementappears manageable, considering past trends in capital mobilisation. Indian banks raised over Rs. 1 trillionin equity during the period from FY 2008 to FY 2012, of which around 54% was mobilised by PSBs and46% by private banks. However, if one were to exclude FY 2008, when some large banks took advantage

of the buoyancy in the capital markets to raise around Rs. 0.5 trillion, the equity raised by Indian banks overthe four years from FY 2009 to FY 2012 was around Rs. 0.5 trillion; of this, around 60% was infused by theGoI/Life Insurance Corporation.

Source: Result Release of Banks, ICRA Research


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While the equity target may appear easy to achieve at first glance, it may not prove to be so eventually,given that the RBI has also introduced loss-absorption features in Additional Tier I capital instruments.These features could well limit investor appetite for these instruments, as it would be difficult to assess theprobability of their conversion into equity or of a principal write-down in a stress scenario (and the extent ofthe resultant loss). In case banks are unable to mobilise the required Additional Tier I and the gap isbridged by raising common equity, the incremental equity requirement may go up to as high as Rs. 2.94trillion over FY 2013 to FY 2018; of which the share of the GoI could be a staggering Rs. 1.2-1.7 trillion.

Capital conservation buffer not to be add in capital funds for prudential exposure norms; willlimit the ability of banks to take large exposuresAt present, the prudential exposure norms are linked to the capital funds of banks, which include both tier Iand tier II capital. As per BASEL III guidelines, capital conservation buffer (2.5%) and counter cyclicalcapital buffer (0-2.5%) will not be included in capital funds for prudential exposure limits. Hence, despite theincrease in overall capitalisation levels, the ability of banks to take large exposures will not increase orrather may decline to some extent.

Increase of 25-30 bps in lending yields may help most banks to protect their return on equity

As of December 31, 2011 around 15 PSBs have less than 8% core Tier I capital. Eight of these PSBs haveless than 7%. When banks with low core Tier I shore up their capital to around 9% (required 8% + 1%cushion), their return on equity (ROE) could drop by 1-4%, which they could seek to compensate by raisingtheir lending yields (as long as competitive forces allow them to do so), increasing fee income, orrationalising costs. In ICRAs view, since the largest bank would also need to shore up its capital and may,therefore, raise its lending yields to compensate for the ROE loss, the smaller banks may also have anopportunity to do the same. However, banks with relatively low core capital (less than 7%) would have totake a knock on their ROE. As for private banks, most of them being well-capitalised already, the transitionto Basel III may not have a significant impact on their earnings. In fact, their competitive position couldimprove when PSBs raise their lending yields. At the same time, the upside potential for private bankscould be limited by the higher minimum core capital requirement. Further, as the countercyclical buffer hasto be set annually, when activated (in times of stress), the buffer requirement could introduce an element ofvariation in the lending rates and/or the ROE of banks.

Table 5:Impact of Basel III on banksprofitability

Current Core Tier

1 capital 6% 7% 8% 9% 10% 11% 12%

Likely Core Tier 1under Basel IIInorms 9%

0.00% 11.4% 12.5% 14.1% 15.0% 16.3% 17.5% 18.7%

0.10% 12.1% 13.2% 14.8% 15.7% 17.0% 18.2% 19.4%

0.15% 12.4% 13.6% 15.1% 16.0% 17.3% 18.6% 19.7%0.20% 12.8% 13.9% 15.4% 16.3% 17.7% 18.9% 20.1%

0.25% 13.1% 14.3% 15.8% 16.7% 18.0% 19.2% 20.4%

0.30% 13.4% 14.6% 16.1% 17.0% 18.3% 19.6% 20.8%

0.35% 13.8% 15.0% 16.5% 17.4% 18.7% 19.9% 21.1%

0.40% 14.1% 15.3% 16.8% 17.7% 19.0% 20.3% 21.5%

0.45% 14.5% 15.7% 17.2% 18.1% 19.4% 20.6% 21.8%

0.50% 14.8% 16.0% 17.5% 18.4% 19.7% 21.0% 22.1%

0.55% 15.2% 16.3% 17.9% 18.8% 20.1% 21.3% 22.5%

0.60% 15.5% 16.7% 18.2% 19.1% 20.4% 21.7% 22.8%

0.65% 15.9% 17.0% 18.6% 19.4% 20.8% 22.0% 23.2%


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As shown in Table 5, if a bank with a 7% current core Tier I and a 15% ROE targets 9% core capital underBasel III, it could end up reporting an ROE of 12.5%, in case there is no change in lending yields; the ROEcould drop to around 13.6%, if the lending yields are raised by 15 basis points (bps); the ROE could remainsame in case the lending yields are increased by 35 bps. On the whole, the lending yields may go up by25-30 bps because of higher capital requirements under Basel III, thereby limiting the impact on ROE tojust 1-2% for the not so well capitalised banks.

Improving quality of capital would benefit the credit profiles of banks

As shown in Chart 4, the quality of capital for Indian banks has been deteriorating over the last five yearswith the core capital percentage declining significantly. However, the situation is likely to get reversed, withexcess Additional tier I and tier II capital to be recognised in the same proportion as the increase incommon equity capital. This would ensure a minimum 67-70% core capital level, while restricting Tier II tojust 17-20%. In ICRAs view, the higher level of capital thus achieved, besides the improvement in thequality of capital, would be a credit positive for banks.

75%64% 70%

0%6%

13%

25% 30%17%

Apr-06 Dec-11 Proposed Under Basel III

Core Capital Additonal Tier 1 Tier 2

Chart 4: Quality of Capital

Source: RBI, Results Release and Basel II Disclosure of Banks and ICRA Research


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Annexure 1: Capitalisation Profiles of Public Sector Banks as on December 31, 2011

Tier I % Tier II % CRAR %

GoIownership

Allahabad Bank 8.9% 3.8% 12.7%58.0%

Andhra Bank 8.2% 4.3% 12.6%58.0%

Bank of Baroda 9.3% 4.1% 13.5% 57.0%

Bank of India 7.7% 3.5% 11.2%65.9%

Bank of Maharashtra 7.1% 4.7% 11.8%79.2%

Canara Bank 9.5% 3.7% 13.2%67.7%

Central Bank of India 7.8% 5.1% 12.9%80.2%

Corporation Bank 7.9% 5.0% 12.8%58.5%

Dena bank 8.3% 3.2% 11.6%58.0%

IDBI Bank 7.7% 6.0% 13.7%65.1%

Indian bank 9.6% 2.3% 11.8%80.0%

Indian Overseas Bank 6.7% 5.2% 11.8% 65.9%

Oriental Bank of Commerce 9.5% 2.6% 12.1%58.0%

Punjab & Sind Bank 8.0% 5.0% 13.0%82.1%

Punjab National Bank 7.9% 3.6% 11.5%58.0%

State Bank of India Group 7.6% 3.9% 11.6%59.4%

Syndicate Bank 8.3% 3.1% 11.5%69.5%

UCO Bank 7.8% 4.5% 12.3%68.1%

Union Bank of India 8.0% 3.7% 11.7%57.1%

United bank of India 8.4% 4.3% 12.6%85.5%

Vijaya Bank 9.0% 3.4% 12.4%57.7%

Total PSBs 8.1% 4.0% 12.1%

Source: Basel II Disclosure and Quarterly Releases of Banks, ICRA Research

Annexure 2: Capitalisation Profiles of Private Sector Banks as on December 31, 2011

Tier I % Tier II % CRAR %

Axis Bank 8.3% 3.5% 11.8%

Federal Bank 15.0% 0.9% 15.9%

HDFC Bank 11.2% 5.1% 16.3%

ICICI Bank 13.1% 5.7% 18.9%IndusInd Bank 10.7% 2.7% 13.4%

ING Vysya Bank 11.0% 3.1% 14.1%

J&K Bank 11.4% 2.2% 13.6%

Kotak Mahindra Bank 15.6% 1.9% 17.5%

South Indian Bank 9.6% 2.4% 12.0%

Total Private banks 11.5% 4.4% 15.9%

Source: Basel II Disclosures and Quarterly Releases of Banks, ICRA Research


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Annexure 3: An illustration on the movement of capital requirement and triggers under variousscenariosRegulatory Capital = Core Capital + Capital Conservation Buffer + Countercyclical buffer (when activated)

Note: Figures in circles represent the minimum regulatory requirementSource: RBI

Introduction ofcountercy

clicalbuffer

Norestrictiononearnin

Higher level of countercyclicalbuffer

Restriction on earning distributionkicks in

Part release ofcountercyclical buffer

Restriction on earningdistribution becomelower

Completerelease ofcountercyclical buffer

Restrictionon earningdistributionbecomehigher


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Annexure 4: Timeline of BASEL III implementation in India

January 1,2013

March 31,2014

March 31,2015

March 31,2016

March 31,2017

March31,2018

Minimum common equityTier I

4.5% 5.0% 5.5% 5.5% 5.5% 5.5%

Capital conservation buffer 0.0% 0.0% 0.625% 1.25% 1.875% 2.5%

Minimum Common Equityplus capital conservationbuffer

4.5% 5.0% 5.625% 6.75% 7.375% 8.0%

Minimum Tier I capital 6.0% 6.5% 7% 7.0% 7.0% 7.0%

Minimum Tier I capital pluscapital conservation buffer

6.0% 6.5% 7.625% 8.25% 8.88% 9.50%

Minimum total capital 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%

Minimum total capital pluscapital conservation buffer

9.0% 9.0% 9.625% 10.25% 10.875% 11.5%

Phase-in of all deductionsfrom common equity tier I

20% 40% 60% 80% 100% 100%

Source: RBI


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