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.