Basel III Norms

There are multiple reforms that could be undertaken in the banking sector, including reform of state-owned banks, without necessarily privatising them

RBI revises counterparty credit risk framework to align with Basel norms, refining capital treatment for derivatives exposures and clarifying rules for clearing members

RBI's revised Basel III norms, effective April 2027, to lower capital needs for banks with reduced risk weights on MSME and housing loans, boosting CET1 ratios

Robust demand from investors for long tenure paper due to softer rate expectation

Fixes coupon at 8.34%, 24 bps higher than previous offering

Next on radar - equity offering to reduce Govt stake in H2Fy24

State-owned Union Bank of India on Friday said it has raised Rs 663 crore from Tier I bonds to fund business growth. "...the bank has allotted unsecured, subordinated, non-convertible, perpetual, taxable, fully paid-up Basel III compliant Additional Tier 1 bonds (AT-1) in the nature of debentures eligible for inclusion in Tier 1 Capital," Union Bank of India said in a regulatory filing. The bank raised Rs 663 crore in aggregate from these bonds, it said. Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the Reserve Bank of India. AT-1 bonds qualify as core or equity capital.

India's Bank of Baroda plans to raise at least 5 billion rupees ($62.52 million) through sale of Basel III compliant additional Tier I perpetual bonds, say three merchant bankers

Banking stocks have broadly reacted positively to the strict capital norms under the Basel regulations put in place for domestic banks over an 18-year period, starting October 1998, RBI paper showed

This, the RBI said, has been done to better align guidelines with the Basel Committee on Banking Supervision standard

Union Bank of India on Thursday said it will allot Basel III compliant bonds next week on a private placement basis, for which it has accepted bids worth Rs 2,000 crore. The bank has considered the issuance of Basel III compliant debt instruments in the nature of debentures of Rs 500 crore, with green shoe option up to Rs 1,500 crore (maximum Rs 2,000 crore) on private placement basis, the bank said in a regulatory filing. The bonds are eligible for inclusion in additional tier I capital, it said. The bonds, with face value of Rs 1 crore each, are perpetual in nature and bear coupon of 8.70 per cent per annum. Perpetual bonds carry no maturity date, so they may be treated as equity, not as debt. The deemed date of allotment of bonds is November 22, 2021, the state-owned lender said. The bonds are rated 'AA'/stable by India Ratings & Research and Crisil.

State-owned Canara Bank on Tuesday said it has raised Rs 120 crore by issuing Basel III compliant bonds

The coupon offered on the bond was 7.75 per cent

I am sure Dr Patra will get the fullest cooperation from the finance minister, who needs workhorses, not prima donnas constantly looking to improve their CVs

CRISIL believes BoB will be able to maintain adequate capitalisation over the medium term, backed by capital support from the Union government

In the revised scheme, the inspection of the UCBs solely under the Banking Regulation Act will be done by the central bank

Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments

To comply with Basel-III capital regulations, banks need to improve and strengthen their capital planning processes

In India, the LEF applies to all banks, apart from the regional rural banks

Basel III reforms are the response of Basel Committee on Banking Supervision to improve banking sectors ability to absorb shocks