Countercyclical Capital Buffer (CCyB)

The Reserve Bank of India (RBI) has decided not to activate the countercyclical capital buffer (CCyB).

According to RBI the current economic conditions do not warrant the activation of this measure.

About Countercyclical Capital Buffer (CCyB)

Genesis The framework for CCyB was introduced in the aftermath of the 2008 global financial crisis, as part of international financial stability measures endorsed by the Basel Committee.
- RBI introduced in February 2015 under Basel III.
Purpose: The CCyB is a regulatory tool that aims to ensure that banks build up extra capital during periods of economic stability and growth, which can be used to maintain credit flow during economic downturns.
Objective
- It requires banks to accumulate a buffer of capital during good times to sustain lending in difficult economic periods.
- It seeks to achieve the macroprudential goal of curbing excessive lending and system-wide risk during periods of excess credit growth.
Activation Framework: The credit-to-GDP gap is the primary indicator for activating the CCyB.
- Other supplementary indicators may also be consider

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Countercyclical Capital Buffer (CCyB)

About Countercyclical Capital Buffer (CCyB)

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