RBI retains SBI, HDFC Bank and ICICI bank in its Domestically Systemically Important Banks (D-SIB) list

Tags: Economy/Finance

The Reserve Bank of India (RBI) has retained SBI, ICICI bank and HDFC bank in the list of Domestically Systemically Important Banks (D-SIB) list for the year 2021. The list was released by the RBI on 2 January 2023. 

The concept of the D-SIB goes back to the failure of big financial institutions in 2008 which led to a global financial crisis.  D-SIBs are those interconnected entities, whose failure can impact the whole of the financial system and create instability.

Systemically important banks attract closer supervision and regulation from the country's central bank as these entities are considered to be too big-to-fail banking companies.

When it started in India 

• RBI started disclosing the name of the bank in the D-SIB list from 2015 and SBI was included in the list.
• ICICI Bank was included in 2016 and HDFC bank was included in 2017.

D-SIB (Domestic Systemically Important Banks)

• The concept behind D-SIB is that there are certain banks in India which cannot be allowed to fail as its failure may badly affect the Indian economy.
• RBI selects banks on their size and their overall contribution in the Indian economy.
• In addition to the usual capital conservation buffer, D-SIBs will need to maintain additional Common Equity Tier 1 (CET1).
•  SBI has to maintain an additional Common Equity Tier 1 (CET1) of 0.60% as a percentage of their Risk Weighted Assets.
• HDFC Bank and ICICI banks have to maintain an additional Common Equity Tier 1 (CET1) of 0.20% as a percentage of their Risk Weighted Assets.

Foreign Banks having branches in India are called Global-Systemically Important Banks (G-SIB).At present no foreign bank has been put in the G-SIB category by RBI.

RBI governor : Shaktikanta Das