RBI list of D-SIBs for 2023
Reserve Bank of India (RBI) released its list of Domestic Systemically Important Banks (D-SIBs) for 2023.
source: Internet
The RBI named the State Bank of India (SBI), ICICI Bank, and HDFC Bank as D-SIBs, which are banks that are too big to fail.
The RBI’s 2023 list includes the following changes:
- ICICI Bank: Remains in the same bucketing structure as last year
- SBI: Moves from bucket 3 to bucket 4
- HDFC Bank: Moves from bucket 1 to bucket 2
What is the D-SIBs ?
D-SIBs are systemically important due to their size, cross-jurisdictional activities, complexity and lack of substitute and interconnection.
- It also means that the bank is too big to fail.
♦ If DSBs fail, there would be significant disruption to the essential services to the banking system and the overall economy.
Declaration/Regulation of D-SIBs:
- It is based on the D-SIBs Framework of RBI which was released in 2014.
♦ This Framework is based on Basel Committee on Banking Supervision’s (BCBS’s) framework for dealing with D-SIBs. - Banks are placed in 5 buckets.
♦ As per latest list, India’s D-SIB’s are State Bank of India (bucket 4) and HDFC Bank (bucket 2), ICICI Bank (bucket 1).
- D-SIBs have to maintain Additional Common Equity Tier 1 (CET1) requirement as a percentage of Risk Weighted Assets (RWAs).
- Bucket 1 banks have to maintain lowest CET1 i.e. 0.20% and Bucket 5 have to maintain highest CET i.e. 1%
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.
- Financial Stability Board (FSB) releases the list of G-SIBs.
Also Read: RBI Financial Stability Report (FSR) 2023