Amendment of the Basel capital accord in respect of the inclusion of general provisions/general loan-loss reserves in capital

November 1991

This document redefines the criteria for the inclusion of general provisions (known in some countries as general loan-loss reserves) in bank capital under the terms of the Basle Capital Accord of July 1988. The purpose is to define general provisions with greater precision so as to ensure greater consistency in the extent to which unidentified provisions are included in capital and in the extent to which elements designed to provide against identified deterioration in the role of particular assets are excluded. At the same time, the caps on the inclusion of general provisions in tier 2 capital are lifted. The amendment was designed to take effect at the latest by end-1993.