Please refer to the BRPD Circular No. 18, dated December 21, 2014.
As per section 3.1.3 of “Guidelines on Risk Based Capital Adequacy – Revised Regulatory Capital Framework for banks in line with Basel–III”, general provision/general loan-loss reserve eligible for inclusion in Tier 2 capital is limited to a maximum 1.25% of credit risk-weighted assets.
Henceforth, the entire general provision maintained against unclassified loans and advances as per regulations will be considered as capital under Tier-2. As such, Footnote No. 08 on page-08 (general provision/general loan-loss reserve eligible for inclusion in Tier 2 will be limited to a maximum 1.25 percentage points of credit risk-weighted assets calculated under the standardized approach) of the said guidelines is superseded by this circular.
This instruction will come into force with immediate effect.