The Reserve Bank on Thursday deferred the implementation of the capital conservation buffer (CCB) requiring banks to set aside additional reserves of 0.625 per cent by a further six months due to the COVID-19 pandemic. The implementation of the regulations was to happen by September 30, and the same has been now deferred to April 1, 2021, the RBI said in a notification.
"In view of the continuing stress on account of COVID-19, it has been decided to defer the implementation of the last tranche of 0.625 per cent of the CCB from September 30, 2020 to April 1, 2021," it said. Accordingly, the minimum capital conservation ratios shall continue to apply till the CCB attains the level of 2.5 per cent on April 1, 2021, the RBI said.
The pre-specified trigger for loss absorption through conversion/ write-down of additional tier 1 instruments (perpetual non-convertible preference shares and perpetual debt instruments), shall remain at 5.5 per cent of risk weighted assets (RWAs) and will rise to 6.125 per cent of RWAs from April 1, 2021, it added. Meanwhile, the central bank also deferred the implementation of Net Stable Funding Ratio (NSFR) guidelines by six months to April 2021 because of the pandemic.
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