What is CCB Full Form in Banking?
The CCB full form in Banking is a Capital Conservation Buffer. A capital buffer is an obligatory capital that financial institutions must retain in addition to their other minimum capital requirements. Regulations aimed at the construction of adequate capital buffers are intended to limit the procyclical nature of lending by encouraging the creation of countercyclical buffers, as outlined in the Basel III regulatory changes developed by the Basel Committee on Banking Supervision.
How does a capital buffer work?
Banks increase their lending activity during times of economic development and reduce lending when the economy slows. When banks run out of money, they have two options: raise new capital or reduce lending. If they cut back on lending, businesses may find finance more expensive or unavailable. This is where the capital buffer comes to the rescue of the banks as it relieves its financial stress.
Why is CCB required?
During times of financial crisis, the banks will experience rapid capital erosion owing to the financial stress. The capital conservation buffer will cover these losses from risky investments. The regulatory authority in India for Banking has the authority to implement both the countercyclical capital buffer and the capital conservation buffer at times of financial stress.
- The full form of CCB is also Central Cooperative Bank.
- The full form of CCB is also a Countercyclical Capital Buffer.
