Not necessary to activate ‘Counter-Cyclical Capital Buffer’: RBI

The Reserve Bank of India (RBI) on Tuesday said that it is not necessary to activate ‘Counter-Cyclical Capital Buffer’ at this point in time.

In financial parlance, the ‘CCyB’ applies on banks to promote sustainable provision of credit to the economy in time of distress.

The framework on ‘CCyB’ was put in place by the Reserve Bank in terms of guidelines issued on February 5, 2015.

Accordingly, the guidelines said that ‘CCyB’ would be activated as and when the circumstances warranted, and that the decision would normally be pre-announced.

“The framework envisages the credit-to-GDP gap as the main indicator, which may be used in conjunction with other supplementary indicators,” the Reserve Bank said on Tuesday.

“Based on the review and empirical analysis of the ‘CCyB’ indicators, it has been decided that it is not necessary to activate ‘CCyB’ at this point in time.”

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