Resources for Basel II Capital Accord (Basel II)

Banks can't take stocks as security

economictimes.indiatimes.com

A volatile stock market has forced the RBI to tweak the rules of banking. The regulator has told banks that they can no longer consider stocks as collateral against loans for calculating the capital adequacy ratio, the minimum capital that banks have to set aside to give loans.

Bankers said that this will not only affect corporates planning to raise long-term loans but also investors and brokers who borrow money against shares. With CAR being at 9% now, a bank has to set aside Rs 9 capital for a Rs 100-loan which carries a risk weighatge of 100%.

View the Resource

Share or bookmarklet this web page at: