RBI says risk weight for foreign sovereign bonds also applicable for foreign central banks

Reserve Bank of India (RBI) today said that the risk weights applicable to foreign sovereign bonds will also be applicable to the foreign central banks.

Those with AA and AAA rating from rating agencies will have zero risk weight. Those with A rating by rating agencies will have risk weight of 20 per cent while those with BBB and Baa will have 50 per cent.

Those below investment grade (BB to B, Ba to B) will have 100 per cent risk weight while those below B will have 150 per cent risk weight.

The central bank said that similar to the claims on the foreign sovereign, that of a foreign central bank in their jurisdiction, denominated in the domestic currency of that jurisdiction, met out of resources of the same currency, would attract a risk weight of zero percent.