HomeIndiaSBI, ICICI, HDFC Bank continue to remain systemically important banks: RBI

SBI, ICICI, HDFC Bank continue to remain systemically important banks: RBI



The RBI on Tuesday said state-owned SBI, along with private sector lenders Bank and Bank continue to be Domestic Systemically Important (D-SIBs) or institutions which are ‘too big to fail’.


SIBs are perceived as that are ‘too big to fail (TBTF)’. This perception of TBTF creates an expectation of government support for these in times of distress. Due to this perception, these lenders enjoy certain advantages in the funding markets.





“SBI, Bank and Bank continue to be identified as Domestic Systemically Important Banks (D-SIBs), under the same bucketing structure as in the 2020 list of D-SIBs,” the Reserve Bank said in a statement.


The additional Common Equity Tier 1 (CET1) requirement for D-SIBs was phased-in from April 1, 2016 and became fully effective from April 1, 2019.


The additional CET1 requirement will be in addition to the capital conservation buffer.


The Reserve Bank of India (RBI) had announced and Bank as D-SIBs in 2015 and 2016.


Based on data collected from banks as on March 31, 2017, Bank was also classified as a D-SIB.


The current update is based on data collected from banks as on March 31, 2021.


The framework for dealing with D-SIBs was issued in July 2014.


The framework requires the RBI to disclose the names of banks designated as D-SIBs starting from 2015 and place these lenders 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.


The Additional Common Equity Tier 1 requirement as a percentage of Risk Weighted Assets (RWAs) in case of is 0.6 per cent, and 0.2 per cent for ICICI Bank and HDFC Bank.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor



Source link

- Advertisment -