Recently, the RBI published a list of the safest banks in India. The list includes HDFC, ICICI, and SBI, respectively. D-SIBs is another name for these banks. A domestic Systematically Important Bank is called a D-SIB. Every year, RBI releases its list. These are the banks whose failure might significantly impact a nation's economy. They cannot be allowed to drown.
But, how these banks are selected and how they are known is essential for the national economy. So, when was it necessary to compile a list of these banks? We'll explain this to you today. Also, we will examine the criteria on what basis a bank is called D-SIB.
Instead of managing the economy in 2008's global recession, large banks also failed. Large countries got stuck in difficulties in such a situation. Then it was thought that certain banks would need to be chosen to support the nation's economy through such trying times. The government will seek to save these banks if there are any issues. DSIB started in this way.
The RBI established a framework for this in the year 2014 and released the first list of DSIB in 2015. SBI and ICICI Bank came in first and second, respectively, on this list. Then, HDFC Bank joined in 2017.
Which banks are included?
These banks are listed among the DSIB banks with assets greater than 2% of the nation's GDP. They are divided into five groups according to importance. From one to five, these are listed in ascending sequence. The most significant bank is the one that comes in at position 5.
There isn't a bank in this country at the moment. The top two banks are ICI and HDFC Bank, with SBI in third place. These banks also apply some rules. They must, for instance, invest a portion of their risk-weighted assets in Tier-1 capital. Tier-1 capital is mostly made up of liquid assets like cash and stocks.