Why in the News?
The RBI designated SBI, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) for 2024.
Current D-SIBs in India:
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What are Domestic Systemically Important Banks (D-SIBs)?
- D-SIBs are banks that are critical to the stability of a country’s financial system.
- They are often termed “Too Big To Fail” (TBTF) because their failure could lead to significant disruptions in the economy.
- The RBI identifies D-SIBs annually.
- The framework for recognizing these banks was issued in July 2014.
- The RBI has been publishing an annual list of D-SIBs since 2015.
D-SIBs are placed in different buckets based on systemic importance scores. Higher bucket rankings require greater capital requirements to absorb losses.
- SBI is in Bucket 4.
- HDFC Bank is in Bucket 3.
- ICICI Bank is in Bucket 1.
D-SIBs must maintain additional Common Equity Tier 1 (CET1) capital based on their bucket.
- SBI: 0.80% of Risk Weighted Assets (RWAs).
- HDFC Bank: 0.40%
- ICICI Bank: 0.20%
Global Systemically Important Banks (G-SIBs):
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