RBI/2012-13/460
DBOD.No.BP.BC.88/21.06.201/2012-13

March 28, 2013

The Chairman and Managing Directors/
Chief Executives Officers of
All Scheduled Commercial Banks
(Excluding Local Area Banks and Regional Rural Banks)

Madam / Sir,

Guidelines on Implementation of Basel III Capital Regulations in India - Clarifications

Please refer to the ‘Guidelines on Basel III Capital Regulations’ issued vide circular DBOD.No.BP.BC.98/21.06.201/2011-12 dated May 2, 2012 on the implementation of Basel III guidelines in a phased manner and our press release No. 2012-2013/1092 dated December 28, 2012 rescheduling the start date of implementation of Basel III capital regulations to April 1, 2013 from January 1, 2013.

2. In view of the shift in the start date of Basel III implementation, all instructions applicable as on January 1, 2013, except those relating to Credit Valuation Adjustment (CVA) risk capital charge for OTC derivatives, would become effective from April 1, 2013 with banks disclosing Basel III capital ratios from the quarter ending June 30, 2013. As the introduction of mandatory forex forward guaranteed settlement through a central counterparty has been deferred pending resolution of certain issues such as exposure norms, etc., the CVA risk capital charges (as indicated in Annex 2 of the Guidelines on Basel III Capital Regulations) would become effective as on January 1, 2014. The other transitional arrangements would remain unchanged and Basel III will be fully implemented as on March 31, 2018.

3. In addition, banks may take note of certain clarifications / amendments in the guidelines as indicated in the Annex. There are no changes (with the exceptions to those indicated in the Annex) in the instructions relating to phasing-out of the non-Basel III compliant regulatory capital instruments as indicated in the Section E of Annex 1 of the Guidelines on Basel III Capital Regulations.

Yours faithfully,

(Rajesh Verma)
Chief General Manager

Encl: a/a