Asia bank capital series: Indian Basel III implementation explained

Author: Ashley Lee | Published: 21 Aug 2013
  • Indian banks, especially public sector banks, will need to issue Basel III-compliant debt to bolster their capital;
  • Reserve Bank of India's (RBI) Basel III regime differs slightly from other jurisdictions, necessitating a higher Additional Tier 1 loss absorption requirement but also allowing for issuances to have temporary write-downs;
  • But the regulations for temporary write-downs have yet to be tested in either Europe or in India. More clarity is needed;
  • United Bank of India (UBI) issued the first Basel III-compliant Tier 2 bond in June. But the deal was criticised as it was rated at the same level as UBI's Basel II issuances, due to the government's majority stake in the bank.

While the regulatory regimes for Basel III capital requirements differ slightly across Asian jurisdictions, the Reserve Bank...