RBI amends capital treatment norms under Basel III.
. Revaluation reserves after 55% discount, would be considered as common equity tier 1 capital (CET1) instead of Tier 2 capital.
· Foreign currency translation reserves arising due to translation of financial statements of a bank’s foreign operations to the reporting currency may be considered as CET1 capital after discount of 25
per cent.
· Deferred tax assets arising due to timing differences may be recognised as CET1 capital up to 10% of a bank’s CET1 capital.
. Positive for PSBs as it would evade risk of huge equity dilution. SBI can gain Rs200bn from revaluation of property which can add ~50bps to CET1 on a/c of revaluation reserve only.
. Revaluation reserves after 55% discount, would be considered as common equity tier 1 capital (CET1) instead of Tier 2 capital.
· Foreign currency translation reserves arising due to translation of financial statements of a bank’s foreign operations to the reporting currency may be considered as CET1 capital after discount of 25
per cent.
· Deferred tax assets arising due to timing differences may be recognised as CET1 capital up to 10% of a bank’s CET1 capital.
. Positive for PSBs as it would evade risk of huge equity dilution. SBI can gain Rs200bn from revaluation of property which can add ~50bps to CET1 on a/c of revaluation reserve only.
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