The unlocking of capital follows a review carried by the RBI with the aim to further align the definition of regulatory capital with the globally adopted Basel III norms, adds the newspaper.
The revised RBI norms will give public sector banks (PSB) access to additional capital of INR 35,000 crore, while it could be about INR 5,000 crore for private sector banks, according to the business daily.
The unlocking of capital follows a review carried by the RBI with the aim to further align the definition of regulatory capital with the globally adopted Basel III norms, adds the newspaper.
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, according to the daily.
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, says the paper.
As per the new RBI 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 5.5 per cent of risk-weighted assets.
RBI Governor Raghuram Rajan had last month said that the central bank was trying to identify non-recognisable capital, such as undervalued assets, already on bank balance sheets and could allow some of these to count as capital under Basel norms, provided a bank meets minimum common equity standards.
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