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Domestic Systemically Important Banks
March 18 , 2019
1951 days
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- SBI, ICICI Bank and HDFC Bank continue to be in the Reserve Bank of India’s list of Domestic Systemically Important Banks (D-SIBs) for 2018.
- D-SIBs are required to maintain higher capital as compared to other banks.
- D-SIB tag indicates that the bank is too big to fail.
- Some banks become systemically important due to their size, cross-jurisdictional activities, complexity and lack of substitute and interconnection.
- Banks whose assets exceed 2% of GDP are considered part of this group.
- Inclusion in the list gives additional comfort to investors that these banks won’t be allowed to fail.
- Therefore, borrowing costs of these banks from the markets are cheaper than their peers.
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