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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Prudential Regulations on Basel III Capital Framework, Exposure Norms, Significant Investments, Classification, Valuation and Operation of Investment Portfolio Norms and Resource Raising Norms for All India Financial Institutions) Directions, 2023

21-Sep-2023 | Press Release: 2023-2024/959 RBI/DoR/2023-24/105 DoR.FIN.REC.40/01.02.000/2023-24

Reserve Bank of India (RBI) has issued the Reserve Bank of India (Prudential Regulations on Basel III Capital Framework, Exposure Norms, Significant Investments, Classification, Valuation and Operation of Investment Portfolio Norms and Resource Raising Norms for All India Financial Institutions) Directions, 2023, which will take effect from April 1, 2024. Here are some key highlights: 1. Applicability: These Directions are applicable to the All-India Financial Institutions (AIFIs) regulated by RBI, including the Export-Import Bank of India (EXIM Bank), the National Bank for Agriculture and Rural Development (NABARD), the National Bank for Financing Infrastructure and Development (NaBFID), the National Housing Bank (NHB), and the Small Industries Development Bank of India (SIDBI). 2. Chapter II - Basel III Capital Regulations: Part A: Guidelines on Minimum Capital Requirement - AIFIs must implement all three Pillars of Basel III capital regulations. This includes adopting standardized approaches for measuring capital charges for credit risk and market risk. For operational risk, AIFIs should use the Basic Indicator Approach. AIFIs are required to implement the Basel III Capital Regulations according to the specified timeline. 3. Guidelines for the SREP of the Reserve Bank and the ICAAP of AIFIs: Basel capital adequacy framework is based on three mutually reinforcing pillars: Pillar 1: Minimum Capital Requirements, which calculates capital requirements considering operational, market, and credit risk. Pillar 2: Supervisory Review Process (SRP), which involves establishing suitable risk management systems in AIFIs.

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