The Reserve Bank of India (RBI) has eased tier-1 capital regulations for banks, offering a much-needed relief to the cash-strapped sector.
"The review was carried out with a view to further aligning the definition of regulatory capital with the internationally adopted Basel III capital standards, issued by the Basel Committee on Banking Supervision (BCBS)," the regulator said in a statement.
Under the amended rules, revaluation reserves arising from change in the carrying amount of a bank’s property consequent upon its revaluation will now be included in Tier I capital instead of Tier II.
The regulator has further said that foreign currency translation reserves arising due to translation of financial statements of a bank’s foreign operations to the home currency will be partly counted as Tier-1 capital.
In addition, deferred tax assets arising due to timing differences will now be partly considered as Tier-1 capital.