RBI defers Basel III Provisions amid COVID Uncertainty

Published on October 02, 2020
RBI defers Basel III Provisions amid COVID Uncertainty
  • The Reserve Bank of India has deferred the implementation of Basel III provisions due to uncertainty of COVID-19
  • In this regard, RBI will repel the final tranche of Capital Conservation Buffer (CCB) and the implementation of Net Stable Funding Ratio (NSFR) by 6 months i.e. 1st April 2021.
  • Capital Conservation Buffer (CCB): It is an additional pool that banks build in normal times. Bank makes use of this during the periods of stress. RBI has asked banks to build CCB to the required 2.5% in the stages. The last stage of 0.625% was to start on 30th Sep 2020. But now this is deferred to 1st April 2021. RBI has earlier deferred the implementation by 6 months from 31st March 2020
  • Net Stable Funding Ratio (NSFR): NSFR requires banks to fund their activities with sufficiently stable sources of funding over a time of a year to reduce future funding risks for banks. As per the prescribed timeline, banks were required to maintain 100% of NSFR from 1st April 2020 but now RBI has deferred it for a second time to 1st April 2021.
  • RBI has also extended enhanced borrowing facility provided to the banks under MSF (Marginal Standing Facility) by 6 months i.e. till 31st March 2021. This borrowing limit for scheduled banks is increased from 2% to 3% of their NDTL (Net Demand Time Liabilities)
  • RBI increased the timeline for additional market borrowing provided to states/UT by 6 months: In April 2020, RBI increased the Ways and Means Advances (WMA) limits and Overdraft (OD) regulations for states and UTs till 30th Sep 2020 in order to deal with crisis arisen due to COVID-19. But now, RBI has extended this timeline by 6 months i.e. till 31st March 2021. Also, RBI has decided to increase the number of days which states and UTs can be overdraft continuously to 21 working days from 14 working days. Also, the number of days for which states and UTs can be in overdraft in a quarter is increased to 50 working days from 36 working days.
  • Static Part: 
    • HQ of RBI: Mumbai
    • Governor of RBI: Shaktikanta Das

Question: 

Q: 1: RBI has extended enhanced borrowing facility provided to the banks under MSF (Marginal Standing Facility) till______
a. 31st March 2021
b. 30th April 2021
c. 31st January 2021
d. 31st Dec 2020

Can I help you?

ramandeep singh

Hey I am Ramandeep Singh. I am determined to help students prepaing for RBI, SEBI, NABARD and IBPS exams. Do you want me to help you ?

Join my class here
    Follow me:
Close Menu
Close Menu