1. Capital Management & Profit Planning

2. Basel II Paid up capital ,Free Reserves and unallocated surpluses
Tier I-Core Capital
Paid up capital ,Free Reserves and unallocated surpluses
Tier II-Supplementary Capital
Subordinated debt of more than 5 years maturity ,loan loss reserve, revaluation reserve,investment fluctuation reserve,limited life preference share-restricted to 100% of tier I capital
Tier III Capital
subordinated debt with shot term maturity [min 2 years] for market risk

3. Total Risk weighted Assets
Risk weighted assets of credit risk
plus
12.5* Capital requirement for market risk
12.5* capital requirement for for operational risk

4. Three pillars First Pillar-minimum capital requirements
Second pillar-supervisory process
Third pillar-market discipline

5. Capital Charge for Credit Risk
Standardized Approach
Internal rating based approach
[1]Foundation Approach
[2]Advanced IRB Approach

6. Credit rating of
sovereign
Risk weight for
Risk weight for banks in that country
AAA TO AA 0%
20%
A+ TO A
50%
BBB+ TO BBB-
100%
BB+ TO BB-
BELOW B-
150%

7. Risk Weight
Retail & SME
EXPOSURE
75%
Mortgage on Residential
Property
35%
Past Due Loans
150%
When specific provisions are less than 20% of the loan amount
-do-
100%
If provision is higher than 20%

8. Capital Charge for Operational Risk
The Basic Indicator Approach
The Standardized Approach
Advanced Management Approach

9. Standardized Approach for Operational Risk
Beta factor- a fixed percentage set by Basel committee
Maximum 18%
Minimum 12%
Banks activities are divided into 8 business lines-corporate finance,trading,retail banking, commercial banking, payment &settlement, agency services, asset management, retail brokering

10. Asset Classification Standard Assets Sub Standard Assets
Doubtful Assts
Loss Assets

11. Provisioning Standard Assts 0.40% Substandard- Secured -provision 10%
Unsecured[realisable value is not more than 10% of o/s] –provision 20%

12. Provision Doubtful I- first 12 months
Provision 20% realizable value of security plus 100% shortfall of security
Doubtful II-further 24 months
Provision 30% realizable value of security plus 100% shortfall of security
Doubtful III-for over 36 months
100% provision
Loss Assets 100%

13. Thank you