Master Circular for consolidating prudential guidelines on Basel III capital adequacy issued to banks

The RBI vide circular dated April 1, 2022 has issued Master Circular for consolidating therein the prudential guidelines on Basel III capital adequacy issued to banks till June 30, 2015. Basel III reforms are the response of Basel Committee on Banking Supervision (BCBS) to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spill over from the financial sector to the real
economy.

A bank shall comply with the capital adequacy ratio requirements at two levels:

1. The consolidated (“Group”) level2 capital adequacy ratio requirements, which measure the
   capital adequacy of a bank based on its capital strength and risk profile after consolidating the
   assets and liabilities of its subsidiaries / joint ventures / associates etc. except those engaged
   in insurance and any non-financial activities; and
2. The standalone (“Solo”) level capital adequacy ratio requirements, which measure the capital adequacy of a bank based on its standalone capital strength and risk profile.