Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: VAT RATES :: empanelment :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: list of goods taxed at 4% :: due date for vat payment :: VAT Audit :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
Latest Circulars »
 RBI releases Annual Report of the Banking Ombudsman Scheme
 Issuance of ₹ 500 bank notes without inset letter, in the Mahatma Gandhi (New Series)
 RBI-Exim Bank's GoI supported Line of Credit of USD 35.00 million to the Government of the Republic of Guinea
 RBI-Amendment to Master Direction on Know Your Customer
 Reserve Bank of India Act, 1934 – Section 42(1A) Withdrawal of the Incremental CRR
 RBI-Transcript of Statement made by Shri R. Gandhi, Deputy Governor
 Requirement of customer due diligence and need for maintenance of records
 Card Not Present transactions – Relaxation in Additional Factor of Authentication for payments upto ₹ 2000/- for card network provided authentication solutions
 Auction of Government of India Dated Securities December 05, 2016
 Withdrawal of Legal Tender Character of the old Bank Notes in the denominations of ₹ 500/- and ₹ 1000/- (Updated as on December 05, 2016)
 RBI-Investment under PIS in M/s Laurus Labs Limited by FIIs/FPIs upto 49 per cent and NRIs upto 24 per cent

RBI-StCBs/CCBs - Risk weights for calculation of CRAR
October, 30th 2014

RBI/2014-2015/278 
RPCD.RCB.BC.No.37/07.51.012/2014-15

October 29, 2014

All State / Central Cooperative Banks (StCBs/CCBs)

Madam / Dear Sir,

Risk Weights for calculation of CRAR

Please refer to our circular RPCD.CO.RF.BC.40/07.38.03/2007-08 dated December 4, 2007 advising StCBs/CCBs to compute CRAR and disclose it as ‘Notes on Accounts’. Risk weights to be allotted to various items of assets were enclosed as annex I to the above mentioned circular.

2. In the light of the circular RPCD.RCB.BC.73 /07.51.012 /2013-14 dated January 7, 2014 on 'Application of Minimum Capital Adequacy Norms', the risk weights on various assets have since been reviewed and revised instructions on risk weights are annexed.

3. The other contents of our circular dated December 7, 2007 remain unchanged.

4. Please acknowledge receipt of this circular to our Regional Office concerned.

Yours faithfully,

(A. Udgata)
Principal Chief General Manager

Encl. as above


ANNEX

Prudential Norms - Risk Weights for Computation of CRAR (StCBs/CCBs)

I. Domestic Operations

A. Funded Risk Assets

Items of Assets

Risk weight

I

Balances

 

 

1

Cash (including foreign currency notes) & balances with RBI

0

 

2

Balances in current account with other banks

20

II

Investments

 

 

1

Investments in Government Securities

2.5

 

2

Investment in other approved securities guaranteed by Central Government / State Governments

2.5

 

3

Investments in other securities where payment of interest and repayment of principal are guaranteed by Central Govt. (include investment in Indira / Kisan Vikas Patras (IVP/KVP) and investments in bonds and debentures where payment of interest and repayment of principal is guaranteed by Central Government / State Governments)

2.5

 

4

Investments in other securities where payment of interest and repayment of principal are guaranteed by State Governments

Note : Investment in securities where payment of interest or repayment of principal is guaranteed by State Government and which has become a non-performing investment, will attract 102.5 percentage risk weight

2.5

 

5

Investments in other approved securities where payment of interest and repayment of principal are not guaranteed by Central / State Governments.

22.5

 

6

Investments in government guaranteed securities of government undertakings which do not form part of the approved market borrowing program
 

22.5

 

7

Claims on commercial banks, District Central Cooperative Banks and State Cooperative Banks, such as fixed deposits, certificates of deposits, money at call and short notice, etc.

22.5

 

8

Investments in bonds issued by All India Public Financial Institutions

102.5

 

9

Investments in bonds issued by Public Financial Institutions (PFIs) for their Tier-II Capital

102.5

 

10

All other investments

Note: Intangible assets and losses deducted from Tier I capital should be assigned zero weight

102.5

 

11

Off-balance sheet (net) position in 'When Issued' securities, scrip-wise

2.5

III

Loans and advances including bills purchased and discounted and other credit facilities

 

 

1

Loans and advances guaranteed by Government of India

0

 

2

Loans guaranteed by State Governments

0

 

3

State Government guaranteed advance which has become a non performing asset

100

 

4

Loans granted to Public Sector Undertakings (PSUs) of Government of India

100

 

5

Loans granted to PSUs of State Governments

100

 

6

Housing Loans

(i) Loans to individuals (fully secured by mortgage of residential properties)
up to Rs 30 lakh

  1. LTV ratio is equal to or less than 75%
  2. LTV ratio is more than 75%

 

 


50
100

(ii) Housing – others

100

 

 

*  LTV ratio should be computed as a percentage of total outstanding in the account (viz. "principal + accrued interest + other charges pertaining to the loan" without any netting) in the numerator and the realizable value of the residential property mortgaged to the bank in the denominator

 

 

7

Consumer credit including Personal loan

125

 

8

Loans up to Rs. 1 lakh against gold and silver ornaments

Note : Where the loan amount exceeds Rs. 1 lakh, the entire loan amount has to be assigned the risk weight applicable for the purpose for which the loan has been sanctioned.

50

 

9

All other loans and advances including Education loan

100

 

10

Loans extended against primary / collateral security of shares / debentures

125

 

11

Leased assets

100

 

12

Advances covered by DICGC / ECGC

Note: The risk weight of 50% should be limited to the amount guaranteed and not the entire outstanding balance in the accounts. In other words, the outstanding in excess of the amount guaranteed, will carry 100% risk weight.

50

 

13

Advances against term deposits, Life policies, NSCs, IVPs and KVPs where adequate margin is available

0

 

14

Loans and advances granted by State/Central cooperative banks to their own staff , which are fully covered by superannuation benefits and mortgage of flat/house

20

 

 

Notes : While calculating the aggregate of funded and non-funded exposure of a borrower for the purpose of assignment of risk weight, banks may 'net-off' against the total outstanding exposure of the borrower –

(a) advances collateralized by cash margins or deposits;

(b) credit balances in current or other accounts of the borrower which are not earmarked for specific purposes and free from any lien;

(c ) in respect of any assets where provisions for depreciation or for bad debts have been made;

(d) claims received from DICGC / ECGC and kept in a separate a/c pending adjustment in case these are not adjusted against the dues outstanding in the respective a/cs;

(e) Subsidies received under various schemes and kept in a separate account

IV

Other Assets

 

 

1

Premises, furniture and fixtures

100

 

2

Interest due on Government securities

0

 

3

Accrued interest on CRR balances maintained with RBI and claims on RBI on account of Government transactions (net of claims of government / RBI on banks on account of such transactions)

0

 

4

Interest receivable on staff loans

20

 

5

Interest receivable from banks

20

 

6

All other assets

100

V

Market Risk on Open Position

 

 

1

Market risk on foreign exchange open position (Applicable to Authorised Dealers only)

100

 

2

Market risk on open gold position

100

B. Off-Balance Sheet Items

The credit risk exposure attached to off-Balance Sheet items has to be first calculated by multiplying the face amount of each of the off-Balance Sheet items by 'credit conversion factors' as indicated in the table below. This will then have to be again multiplied by the weights attributable to the relevant counter-party as specified above.

Sl. No

Instruments

Credit Conversion Factor (%)

1

Direct credit substitutes e.g. general guarantees of indebtedness (including stand L/Cs serving as financial guarantees for loans and securities) and acceptances (including endorsements with character of acceptance)

100

2

Certain transaction-related contingent items (e.g. performance bonds, bid bonds, warranties and standby L/Cs related to particular transactions)

50

3

Short-term self-liquidating trade-related contingencies (such as documentary credits collateralized by the underlying shipments)

20

4

Sale and repurchase agreement and asset sales with recourse, where the credit risk remains with the bank.

100

5

Forward asset purchase, forward deposit and partly paid shares and securities, which represent commitments with certain draw down

100

6

Note issuance facilities and revolving underwriting facilities

50

7

Other commitments (e.g., formal standby facilities and credit lines) with an original maturity of over one year

50

8

Similar commitments with an original maturity up to one year, or which can be unconditionally cancelled at any time

0

9

(i) Guarantees issued by banks against the counter guarantees of other banks 
(ii) Rediscounting of documentary bills accepted by banks (Bills discounted by banks which have been accepted by another bank will be treated as a funded claim on a bank)
Note : In these cases, banks  should be fully satisfied that the risk exposure is, in fact, on the other bank.  Bills purchased / discounted / negotiated under LC (where the payment to the beneficiary is not made 'under reserve') will be treated as an exposure on the LC issuing bank and not on the borrower. All clean negotiations as indicated above, will be assigned the risk weight  normally applicable to inter-bank exposures, for capital adequacy purposes. In the case of negotiations 'under reserve' the exposure should be treated as on the borrower and risk weight assigned accordingly.

20

 

20

10

Aggregate outstanding foreign exchange contracts of original maturity –

 

(a) less than 14 calendar days 

0

(b) more than 14 days but less than one year

2

(c) for each additional year or part thereof

3

 

Notes :

 

 

While calculating the aggregate of funded and non-funded exposure of a borrower for the purpose of assignment of risk weight, bank may 'net-off' against the total outstanding exposure of the borrower credit balances in current or other accounts which are not earmarked for specific purposes and free from any lien.

 

 

After applying the conversion factor as indicated above, the adjusted off-balance sheet value shall again be multiplied by the weight attributable to the relevant counter-party as specified.

 

Note : At present, State and District Central Cooperative Banks may not be undertaking most of the off-balance sheet transactions. However, keeping in view their potential for expansion, risk- weights are indicated against various off-balance sheet items, which, perhaps banks may undertake in future.

II. Additional risk weights in respect of overseas operations of Indian banks (applicable to Authorised Dealers only)

1.  Foreign Exchange and Interest Rate related Contracts

(i)  Foreign exchange contracts include the following:

a.  Cross currency interest rate swaps
b.  Forward foreign exchange contracts
c.  Currency futures
d.  Currency options purchased
e.  Other contracts of a similar nature

(ii) As in the case of other off-Balance Sheet items, a two stage calculation prescribed below shall be applied:

(a) Step 1 - The notional principal amount of each instrument is multiplied by the conversion factor given below:

Original Maturity

Conversion Factor

Less than one year

2%

One year and less than two years

5% (i.e. 2% + 3%)

For each additional year

3%

(b) Step 2 - The adjusted value thus obtained shall be multiplied by the risk weight allotted to the relevant counter-party as given in A above.

2.  Interest Rate Contracts

(iii)  Interest rate contracts include the following :

a.  Single currency interest rate swaps
b.  Basic swaps
c.  Forward rate agreements
d.  Interest rate futures
e.  Interest rate options purchased
f.  Other contracts of a similar nature

(iv) As in the case of other off-Balance Sheet items, a two stage calculation prescribed below shall be applied:

(a)  Step 1 - The notional principal amount of each instrument is multiplied by the percentages given below :

Original Maturity

Conversion Factor

Less than one year

0.5%

One year and less than two years

1.0%

For each additional year

1.0%

(b) Step 2 - The adjusted value thus obtained shall be multiplied by the risk weight allotted to the relevant counter-party as given in 'A' above.

Note : At present, most of the State and District Central Cooperative Banks are not carrying out forex transactions. However, those who have been given A.D's licence may undertake transactions mentioned above. In the event of any uncertainty in assigning risk weights against a specific transaction, RBI clarification may be sought for.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions