SBI, ICICI Bank, HDFC Bank remain systemically important banks

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sbi, icici bank, hdfc bank remain systemically important banks Daily Current Affairs Article 22th January 2021: State-owned SBI, along with private sector lenders ICICI Bank and HDFC Bank continue to be Domestic Systemically Important Banks (D-SIBs) or institutions which are 'too big to fail'.

The Reserve Bank had issued the framework for dealing with domestic systemically important banks on July 22, 2014.

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The D-SIB framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs starting from 2015 and place these banks in appropriate buckets depending upon their systemic importance scores (SISs).

Based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it.

According to analysts, too big to fail is a phrase used to describe a bank or company that’s so entwined in the economy that its failure would be catastrophic.

In case a foreign bank having branch presence in India is a global systemically important bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its risk weighted assets (RWAs) in India.

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