CURRENT AFFAIRS

Detailed explanation-1: -Canara Bank has raised Rs 1000 crore in Basel III-Compliant Additional Tier I, Series III bonds, at a coupon rate of 8.07% per annum.

Detailed explanation-2: -RBI voluntarily adopted capital adequacy regulations in April 1992 for the Indian banking sector, thus complying with the best practices of Basel I norms recommended by BCBS in 1988. These capital adequacy norms were revised to Basel II and subsequently upgraded to Basel III.

Detailed explanation-3: -Basel III norms require Indian banks to maintain a capital ratio of 11.5% divided into 8% in tier 1 capital and tier 2 capital. It should be noted that AT-1 bonds are known “unsecured subordinated perpetual non-convertible bonds” that constitute a component of a bank’s permanent capital.

Detailed explanation-4: -These reforms are due to take effect from 1 January 2023, as announced by the Governors and Heads of Supervision in March 2020.