IMPLEMENTATION OF BASEL III IN BANGLADESH. REF: BRPD CIRCULAR NO. 18 DATED 21.12.2014.

Please refer to BRPD CIRCULAR NO. 07 DATED 31.03.2014 on captioned subject.

  1. An Action Plan/Roadmap was issued for implementation of Basel-III in Bangladesh vide the above mentioned circular. For effective implementation of Basel-III, the Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework in line with Basel III) has been gone through a rigorous review and consultative process since the issuance of Roadmap. After accommodating the comments and reviews from different stakeholders on the draft, the Guidelines has been finalized and issued vide this circular. This, “Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel III)” will replace “Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel II)” issued vide BRPD Circular No. 35 dated 29.12.2010.
  2. Consequentially, the Action Plan/Roadmap vide BRPD Circular No. 07 dated 31.03.2014 has been revised (Annex-1).
  3. “Guidance Note on Liquidity Coverage Ratio (LCR) & Net Stable Funding Ratio (NSFR)” will be issued accordingly by December, 2014.

This circular shall come into force with effect from 01.01.2015.

Please acknowledge receipt.

Annex-1

Action Plan/Roadmap

Action Deadline
Issuance of Guidelines on Risk Based Capital Adequacy December 2014
Commencement of Basel III Implementation process January 2015
Capacity Building of bank and BB officials January 2015- December 2019
Initiation of Full Implementation of Basel III January 2020

 

Phase-in Arrangements

 

The phase-in arrangements for Basel III implementation will be as follows:

2015 2016 2017 2018 2019 2020
Minimum Common Equity Tier-1 (CET-1) Capital Ratio 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
Capital Conservation Buffer 0.625% 1.25% 1.875% 2.50% 2.50%
Minimum CET-1 plus Capital Conservation Buffer 4. 50% 5.125% 5.75% 6.375% 7.00% 7.00%
Minimum T-1 Capital Ratio 5.50% 5.50% 6.00% 6.00% 6.00% 6.00%
Minimum Total Capital Ratio 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Minimum Total Capital plus Capital Conservation Buffer 10.00% 10.625% 11.25% 11.875% 12.50% 12.50%
Phase-in of deductions from CET1
Excess Investment over 10% of a bank’s equity in the equity of banking, financial and insurance entities1.  

20%

 

40%

 

60%

 

80%

 

100%

 

100%

Phase-in of deductions from Tier 2 Revaluation Reserves (RR)2
RR for Fixed Assets, Securities and Equity Securities 20% 40% 60% 80% 100% 100%
Leverage Ratio 3% 3% 3%

Readjustment

Migration to Pillar 1
 

Liquidity Coverage Ratio

>= 100%

(From Sep.)

 

>=100%

 

>=100%

 

>=100%

 

>=100%

 

>=100%

 

Net Stable Funding Ratio

>100%

(From Sep.)

 

>100%

 

>100%

 

>100%

 

>100%

 

>100%

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