Systemically Important Banks (SIBs)

 Domestic Systemically Important Banks (D-SIBs)

The Domestic Systemically Important Banks 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).

Not even a single bank from India is in the list of Global Systemically Important Banks. These are those banks which are extremely large and if they collapse the global economic collapses as well. The list of global systemically important Banks is published by BASEL committee on banking supervision.

The RBI has prepared a list of Domestic Systemically Important Banks. They are those banks which are largest in India and have provided total loan of not less than 2% of our GDP. Hence if they collapse, the Indian economy will be affected adversely. Initially only SBI and ICICI Bank were in this list. Later on, even HDFC Bank was added.

On the other hand, all the NBFCs which have given a loan of not less than 500 crore rupees are in the list of Domestic Systemically Important NBFCs. 

Background: 

The Reserve Bank had issued the Framework for dealing with Domestic Systemically Important Banks (D-SIBs) on July 22, 2014.

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 2015 and 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, 2022.

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