The Reserve Bank of India (RBI) has recently released the list of Domestic Systemically Important Banks (D-SIB) 2021, in which three important banks of India have been included. SIBs are considered banks that are 'too big to fail (TBTF)'.

RBI released the list of domestic systemically important banks

D-SIB 2021: The Reserve Bank of India (RBI) has recently released the list of Domestic Systemically Important Banks (D-SIB) 2021, in which India's three important banks SBI, ICICI, and HDFC have been included.

According to the D-SIB list of 2020, RBI has again included these banks in this list. After the Global Financial Crisis of 2008, Central Banks around the world started monitoring 'too-big-to-fail' banking institutions.

RBI releases 2022 list of Domestic Systemically Important Banks (D-SIBs)https://t.co/4rUtJNjHHH

ReserveBankOfIndia (@RBI) January 2, 2023

Domestic Systemically Important Bank Highlights:

According to RBI, the additional Common Equity Tier 1 (CET-1) requirement for D-SIBs began on April 1, 2016, and will be in addition to the capital conservation buffer till April 1, 2019.

According to RBI, these three banks are one of the largest financial institutions in the country. Those who cannot be allowed to drown under any circumstances.

In 2015 and 2016, RBI included SBI and ICICI Bank in the D-SIB list. After this, by March 31, 2017, RBI had also added HDFC to this list.

What is the Framework for D-SIB?

RBI issued a structure dated 22 July 2014 for Domestic Systemically Important Bank (D-SIB).

According to this framework, from the year 2015, RBI issues a list of banks that are classified according to their Systemically Important Score (SIS).

SIBs are considered banks that are 'too big to fail (TBTF)'. According to this concept of TBTF, government assistance is provided for these banks at the time of crisis.

As per RBI, a D-SIB must meet an additional common equity norm depending on the bucket in which they are classified.

SIBs apply subject to additional policy measures to address the issue of systematic risks and the moral hazard they pose.

The rules under G-SIB for foreign banks are:

Rules have been made for foreign banks under Global Systemically Important Bank (G-SIB), under this, if a foreign bank or its branch is in India, then it will have to maintain an additional CET1 capital surcharge in India under G-SIB. Which will be in proportion to its Risk Weighted Assets (RWAs) in India.