What are the objectives of Countercyclical Capital Buffer (CCCB)?

The objectives of the Counter Cyclical Capital Buffer (CCCB) are as under: To build a buffer of capital in good times, which may be used to maintain the flow of credit to the real sector in difficult times. To restrict the banking sector from indiscriminate lending in periods of excess credit growth that are often been associated with the building up of system-wide risks. The purpose of CCCB is that the Reserve Bank of India monitors credit growth and make decisions on the size of the Countercyclical Capital Buffer. The size will vary between 0% and 2.5% of RWA to be held in the form of CET-1 Capital, depending on the central banks' judgment as to the extent of the build-up of system-wide risk. It is dependent on: Credit-to-GDP Gap (the difference between the Credit/GDP ratio at a point in time and the long-term trend of the ratio) Gross NPA Growth.