RBI retains SBI, ICICI and HDFC Banks as ‘TOO BIG TO FAIL’ banks

RBI retains SBI, ICICI and HDFC Banks as ‘TOO BIG TO FAIL’ banks

Part of: GS Prelims and GS- III – Banking

In news 

• The RBI has retained State Bank of India, ICICI Bank and HDFC Bank as domestic systemically important banks (D-SIBs) or banks that are considered as “too big to fail”.

Key takeaways

• The RBI had issued the framework for dealing with domestic systemically important banks on July 22, 2014.
• The D-SIB framework requires the RBI 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).
• According to analysts, 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.
• In case a foreign bank having branch presence in India is a global systemically important bank (G-SIB), it has to maintain additional capital surcharge in India as applicable to it as a G-SIB, proportionate to its risk weighted assets (RWAs) in India.