[feb] Capital conservation buffer

Question 1

What?

Answer 1

introduced under the international Basel III norms.

The concept says that during good times, banks must build up a capital buffer that can be drawn from when there is stress.

In India, the minimum capital requirement is 9 per cent.

The CCB would be 2.5 percentage points over and above the minimum capital requirement

Question 2

Context?

Answer 2

Out of the total capital requirement of 11.5% under BASEL III norm, 2.5% is Capital Conservation Buffer and out of this 2.5% , just 0.625% has still not been made effective which the banks are required to do now by 1st Oct 2021.