State Bank of India, HDFC Bank and ICICI Bank continue to be identified as D-SIBs in the RBI’s 2024 list.
About 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 of D-SIBs
- Based on the D-SIBs Framework of RBI (2014).
- Framework is based on Basel Committee on Banking Supervision’s (BCBS’s) framework.
- Banks having size as a percentage of GDP equal to or more than 2% are considered for D-SIB list.
- Banks are placed in 5 buckets on the basis of Additional Common Equity Tier 1 (CET1) requirement as a percentage of Risk Weighted Assets (RWAs).
- Bucket 1 banks have to maintain lowest CET1 and Bucket 5 banks have to maintain highest.
- 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.
Key Terms
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