Context:

The Reserve Bank of India released a list of Domestic Systemically Important Banks (D-SIBs) based on the Framework for dealing with D-SIBs.

D-SIBs

• SBI, ICICI Bank, and HDFC Bank are identified as Domestic Systemically Important Banks (D-SIBs).
• These banks are considered ‘too big to fail banks.
• SIBs are subjected to higher levels of supervision so as to prevent disruption in fi financial services in the event of any failure.
• These banks also enjoy certain advantages in funding markets.

D-SIB framework

• 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.
  • 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.