Financial Daily from THE HINDU group of publications
Sunday, Jun 27, 2004
Financial Daily from THE HINDU group of publications Sunday, Jun 27, 2004 |
||
|
|
||
|
Money & Banking
-
RBI & Other Central Banks RBI asks banks to maintain capital charge for market risks Our Bureau
Mumbai , June 26 THE Reserve Bank of India has decided to assign explicit capital charge for market risks on the lines of the Basel Committee guidelines. Banks should maintain capital charge for market risks in a phased manner over a two-year period. Capital for market risks on securities included the `Held for Trading' category, open gold position limit, open foreign exchange position limit, trading positions in derivatives and derivatives entered into for hedging trading book exposures by March 31, 2005, said a circular from the central bank addressed to the chief executives of all scheduled commercial banks. In addition, capital for market risks on securities included the `Available for Sale' investment category by March 31, 2006. With a view to ensuring smooth implementation of the guidelines, banks may nominate suitable official(s) who would be the contact point in the bank. The Basel Committee on Banking Supervision (BCBS) had issued the `Amendment to the Capital Accord to incorporate market risks' containing comprehensive guidelines to provide explicit capital charge for market risks, said a release from the apex bank. In India, as an initial step towards prescribing capital charge for market risks, banks were advised to assign an additional risk weight of 2.5 per cent on the entire investment portfolio; assign a risk weight of 100 per cent on the open position limits on foreign exchange and gold; and build up Investment Fluctuation Reserve up to a minimum of five per cent of the investments in Held for Trading and Available for Sale categories.
More Stories on : RBI & Other Central Banks
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|