RBI announced relaxation of certain norms in the balance sheet which will unlock 40,000 crores to support the capital requirement of Indian banks.
Flash points
- Indian banks are facing a huge loss due to the increase in Non Performing assets which have eroded the Capital of these banks
- The revised RBI norms will give public sector banks (PSB) access to additional capital of INR 35,000 crore
- It could be about INR 5,000 crore for private sector banks
- RBI have aligned the definition of regulatory capital according to the new Basel III norms
- Accordingly, Banks have now been allowed to include some items, such as property value and foreign exchange, for calculation of Tier 1 capital (CET1), instead of Tier 2 capital
- Deferred tax assets arising due to timing differences may be recognized as CET1 capital up to 10 per cent of a bank’s CET1 capital
- State Bank of India (SBI) will be one of the biggest beneficiary from the change in the carrying amount of a bank’s property on the balance sheet, as it has huge real estate across the country
- According to the New Norms, CET1 capital, comprising paid-up equity capital, statutory reserves, capital reserves, other disclosed free reserves (if any) and balance in P&L Account must be at least 5 per cent of risk-weighted assets
Points to note
- Finance minister Arun Jaitley has proposed an infusion of 25000 crores for Banks in his budget speech
- RBI governor- Raghuram Rajan
AffairsCloud Recommends Oliveboard Mock Test
AffairsCloud Ebook - Support Us to Grow
Govt Jobs by Category
Bank Jobs Notification
