SBI and ICICI Bank are Systemically Important Banks: RBI

The Reserve Bank of India (RBI) on Monday announced the designation of State Bank of India and ICICI Bank as Domestic Systemically Important Banks (D-SIBs).

Systemically important banks are usually considered as banks that are ‘Too Big To Fail (TBTF)'.

"D-SIBs will be subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system," the central bank said in a statement.

As per the framework for dealing with D-SIBs, RBI will determine a cut-off score beyond which banks will be considered as D-SIBs.

Banks will be plotted into four different buckets and will be required to have additional Common Equity Tier 1 (CET1) capital requirement ranging from 0.2 per cent to 0.8 per cent of risk weighted assets, depending upon the bucket they are plotted into.

Additional CET1 requirement as a percentage of Risk Weighted Assets (RWAs) for SBI is 0.6 per cent and that of ICICI Bank is 0.2 per cent, RBI said.

The framework requires RBI to disclose the names of banks designated as D-SIBs every year in August starting from August 2015.

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