RBI revises Basel III capital norms, halves maturity to 5 yrs RBI today issued revised and final guidelines for raising non-equity regulatory capital instruments by banks under the stringent Basel III framework under which lenders can issue tier 2 capital with a minimum original maturity of 5 years as against 10 years now. The existing guidelines have been reviewed further with a view to facilitate raising of non-equity regulatory capital instruments by banks under Basel III framework. Accordingly, certain specific eligibility criteria of such instruments have been amended as indicated in the subsequent paragraphs. These are also intended to incentivise investors and to increase the investor base. The guidelines said the call option on additional tier I instruments- perpetual non-cumulative preference shares ( PNCPS) and perpetual debt instruments (PDIs) will be permissible at the initiative of the issuer after the instrument has run for at least five years. The loss absorbency features of the instrument should be clearly explained and the investor’s sign-off for having understood these features and other terms and conditions of the instrument should be obtained. RBI guideline can be accessed from following link rbi.org.in/scripts/NotificationUser.aspx?Id=9202&Mode=0
Posted on: Tue, 02 Sep 2014 10:33:53 +0000
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