SBI, ICCI, HDFC bank remain as Domestic Systematecially important banks: RBI
WHY IN NEWS:
- The RBI Stated SBI, ICICI Bank and HDFC 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 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.
Background:
- The Reserve Bank had issued the Framework for dealing with Domestic Systemically Important Banks (D-SIBs) on July 22, 2014.
- 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).
- Based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it.
- 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, i.e., additional CET1 buffer prescribed by the home regulator (amount) multiplied by India RWA as per consolidated global Group books divided by total consolidated global Group RWA.
- The Reserve Bank had announced SBI and ICICI Bank as D-SIBs in 2015and 2016. Based on data collected from banks as on March 31, 2017, HDFC Bank was also classified as a D-SIB, along with SBI and ICICI Bank.
- The current update is based on the data collected from banks as on March 31, 2021.
What is systemically important financial institution (SIFI)
- A systemically important financial institution(SIFI) is a bank, insurance company, or other financial institution whose failure might trigger a financial crisis. They are colloquially referred to as “too big to fail”.
- Financial institutions have been characterised as systemically important if their distress or disorderly failure would cause significant disruption to the financial system and economic activitydue to their size, complexity and systemic interconnectedness.
About State Bank Of India:
- SBI chairman – Dinesh kumar khara
- SBI headquarter – Mumbai
- SBI founded on 1st july 1955
- One fact about sbi’s logo – it is came from national institute of design, Ahemedabad and it was inspired by the kankariya lake.
About HDFC bank:
- Chairman -Atanu Chakraborty
- CEO -Sashidhar Jagdishan
- Founded – 1994 August
- Headquarter – Mumbai.
About ICCI bank:
- Chairperson- Girish Chandra Chaturvedi
- MD and CEO- Sandeep bakshi
- Founded – 5 January 1955
- Headquarters – Vadodara, Gujart
- Corporate Office- Mumbai
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