RBI Identifies SBI, HDFC Bank, and ICICI Bank as D-SIBs

Current Context: On November 13, 2024, the Reserve Bank of India (RBI) announced that State Bank of India (SBI), HDFC Bank, and ICICI Bank will continue to be recognized as D-SIBs.

• This designation indicates that these banks are "too big to fail" due to their substantial impact on the Indian financial system.
• Consequently, they are required to maintain higher capital buffers to ensure greater resilience during financial crises.
• Implications of D-SIB Status
• Enhanced Capital Requirements: Effective April 1, 2025, SBI and HDFC Bank must adhere to stricter capital requirements, ensuring they have sufficient capital to absorb potential losses, thus safeguarding the financial system's stability.
• Robust Supervision: These banks will be subject to intensified scrutiny and supervision by the RBI to maintain sound operational practices and minimize systemic risks.
• Significance to Economy: Their designation underscores their vital role in the financial ecosystem, as their failure could trigger widespread economic repercussions.

Question:

1 Which banks were designated as Domestic Systemically Important Banks (D-SIBs) by the Reserve Bank of India on November 13, 2024?

• A) Punjab National Bank, Axis Bank, and Bank of Baroda
• B) Axis Bank, ICICI Bank, and HDFC Bank
• C) State Bank of India, Kotak Mahindra Bank, and HDFC Bank
• D) State Bank of India, HDFC Bank, and ICICI Bank

Answer: D) On November 13, 2024, the Reserve Bank of India (RBI) announced that State Bank of India (SBI), HDFC Bank, and ICICI Bank will continue to be recognized as D-SIBs.