Domestic systemically important banks (D-SIBs) for 2020

The Reserve Bank of India (RBI) has retained State Bank of India, ICICI Bank and HDFC Bank as domestic systemically important banks (D-SIBs) for 2020.

• It means, these banks are “too big to fail”. The ‘too big to fail’ is a phrase used to describe a bank or company that’s so entwined in the economy that its failure would be catastrophic.

• ‘Too-big-to-fail’ lenders are banks whose failure could impact the financial system as a whole because of their size and interconnectedness.

• The D-SIB framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs starting from 2015 and place these banks in appropriate buckets depending upon their systemic importance scores (SISs).

• This list is published every year.

• 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 in India as applicable to it as a G-SIB, proportionate to its Risk Weighted Assets (RWAs) in India