Explain the following features of the Basel-III accord : Minimum Total Regulatory Capital Requirement Counter Cyclical Buffer Leverage Ratio.

Minimum Total Regulatory Capital Requirement : Under revised guidelines (BASEL III) minimum total regulatory capital will consist of the sum of the following categories: Tier 1 Capital (going-concern capital) Common Equity Tier 1 capital Additional Tier 1 capital Tier 2 Capital (going-concern capital) As of 2019, under Basel III, a bank's tier 1 and tier 2 capital must be at least 8% of its risk-weighted assets. Counter Cyclical Buffer : As per Basel III norms regulators of banks of the countries are also responsible for regulating credit volume in their national economies. If credit growth is rapidly expanding than GDP growth, bank regulators can increase their capital requirements with the help of the Countercyclical Buffer to curb the excessive credit growth. The counter cyclical buffer suggested varies between 0% - 2.5% and it is meant to restrict excess credit growth which may turn out to be counter- productive. The aim of the Countercyclical Capital Buffer (CCCB) regime is twofold. Firstly, it requires banks to build up a buffer of capital in good times which may be used to maintain flow of credit to the real sector in difficult times. Secondly, it achieves the broader macro-prudential goal of restricting the banking sector from indiscriminate lending in the periods of excess credit growth that have often been associated with the building up of system-wide risk. Leverage Ratio : It is defined as Ratio of Tier 1 Capital to Total Assets. According to Basel III this ratio should be a minimum of at least 3% even where there is no risk weighting. According to Basel III rules BCBS agreed to test minimum Tier 1 leverage ratio of 3% during the parallel run period by 2017. This was also made applicable for banks in India. During the period of parallel run, banks should strive to maintain their existing level of leverage ratio but, in no case the leverage ratio should fall below 4.5%. A bank whose leverage ratio is below 4.5% may endeavour to bring it above 4.5% as early as possible. According to the data released by RBI, most of the banks are maintaining leverage ratio of over 4.5%. (The ratio is calculated on quarterly basis).