China's banking regulator has drawn up a tough new set of capital requirement rules as part of efforts to implement Basel III guidelines, according to a document obtained by Reuters on Friday.

The draft by the China Banking Regulatory Commission confirmed reports that appeared in local media this week.

China's big banks, or systemically important financial institutions (SIFIs), will be subject to a minimum capital adequacy ratio (CAR) of 11.5 percent under normal conditions.

But this could rise to 14 percent, with a counter-cyclical additional requirement up to to 2.5 percent if CBRC thinks that credit growth is abnormally strong.

Liquidity and leverage ratios will also be introduced in a broader regulatory framework for controlling bank lending and financial risks.

Following are the main highlights:

* Capital adequacy ratio

-- Minimum 11.5 percent CAR for SIFIs, in addition to a possible counter-cyclical requirement of up to 2.5 percent; new rules start in early 2012 and banks must meet the requirements by end of 2013;

-- Minimum 10.5 percent CAR for non-SIFIs, or smaller banks; no counter-cyclical requirement;

-- Minimum core tier-1 CAR requirement is set at 5 percent, which is stricter than the 4.5 percent requirement in Basel III

* Leverage ratio

-- Tier-one capital must be at least 4 percent of total on- and off-balance sheet assets; new rules start in early 2012; SIFIs to meet the requirement by end-2013, non-SIFIs by end-2016;

-- The 4 percent requirement is higher than the 3 percent minimum requirement in Basel III

* Liquidity ratios

-- Liquidity Coverage Ratio (LCR), or the ratio between high-quality liquid assets and net cash outflows for a 30-day period, must be at least 100 percent; all banks to meet the requirements by end-2013;

-- Net Stable Funding Ratio (NSFR), or the ratio between usable stable funding sources and needed stable funding sources, is required to be at least 100 percent; all banks to meet the requirement by end-2013

* Provisions

-- Provisions must be at least 2.5 percent of total outstanding loans;

-- Provisions must be at least 150 percent of total non-performing loans;

-- SIFIs must meet requirements by end-2013, non-SIFIs by end-2016;

* Grace period

-- In general, China requires its SIFIs to meet the new requirements by end-2013 and its non-SIFIs to meet the new rules by end-2016. Basel III set the deadline at Jan. 1, 2019.

* SIFIs

-- Criterion about SIFI have not finalised, but the biggest five lenders (Industrial & Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China and Bank of Communications Co Ltd are likely to be labelled as SIFIs.