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Domestic Systemically Important Banks (D-SIBs): By RBI

Published on January 03, 2023
Current Context: The Reserve Bank of India has designated the three largest lenders in India – State Bank of India, ICICI Bank, and HDFC Bank – as Domestic Systemically Important Banks (D-SIBs).
Domestic Systemically Important Banks (D-SIBs): By RBI
  • This means that these banks are considered too big to fail and require higher capital requirements to protect against financial instability.
  • The Reserve Bank of India (RBI) first designated the State Bank of India (SBI) as a Domestic Systemically Important Bank (D-SIB) in 2015, and ICICI Bank was given this classification in 2016. Based on data from banks as of March 31, 2017, HDFC Bank was also classified as a D-SIB, along with SBI and ICICI Bank. The current update is based on data from banks as of March 31, 2022.
  • As D-SIBs, these banks are considered to be interconnected entities whose failure could potentially have a ripple effect on the entire financial system, leading to instability. As a result, the Reserve Bank of India closely supervises and regulates these banks to ensure their stability.
  • A Domestic Systemically Important Bank (D-SIB) is a financial institution that is considered to be so critical to the overall stability of the financial system that its failure could potentially lead to significant disruption. To mitigate this risk, D-SIBs are required to hold higher levels of capital, which act as a buffer to absorb potential losses and ensure the stability of the bank. This helps to prevent the failure of a D-SIB from causing widespread instability in the financial system.

Question: 

Q.1 Which of these banks are classified as D-SIBs by the Reserve Bank of India?
a. HDFC
b. SBI
c. ICICI
d. All of the above
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