HDFC Bank accorded DSIB status

Q.  RBI has listed which Indian bank(s) as a domestic systemically important bank?
- Published on 06 Sep 17

a. ICICI
b. SBI
c. HDFC
d. All of the above

ANSWER: All of the above
 
HDFC Bank accorded DSIB statusThe Reserve Bank of India has listed HDFC Bank as a domestic systemically important bank (DSIB) under the bucketing structure identified last year.

State Bank of India and ICICI Bank were identified as DSIBs under the RBI rules in 2015.

The additional Common Equity Tier 1 (CET1) requirement for D-SIBs has already been phased-in from April 1, 2016 and will become fully effective from April 1, 2019.

The additional CET1 requirement will be in addition to the capital conservation buffer.

D-SIB surcharge for HDFC Bank will be applicable from April 1, 2018.

What is DSIB?
  • The RBI had issued the framework for dealing with domestic systemically important banks (D-SIBs) on July 22, 2014.
  • The D-SIB framework requires the RBI to disclose the names of banks designated as D-SIBs every year in August starting from 2015 and place these banks in appropriate buckets depending upon their systemic importance scores (SISs).
  • In case a foreign bank having branch presence in India is a global systemically important bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its risk weighted assets (RWAs) in India.
  • Based on their systemic importance scores in ascending order, banks will be plotted into four different buckets and will be required to have additional Common Equity Tier 1 capital requirement ranging from 0.20 per cent to 0.80 per cent of risk weighted assets.
  • SIBs are perceived as banks that are ‘Too Big To Fail (TBTF)’. This perception of TBTF creates an expectation of government support for these banks at the time of distress.

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