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Business News/ Politics / Policy/  SBI, ICICI & HDFC Bank to comply with additional capital norms by 1 April: RBI
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SBI, ICICI & HDFC Bank to comply with additional capital norms by 1 April: RBI

SIBs are subjected to higher levels of supervision so as to prevent disruption in financial services in the event of any failure 
  • "The additional Common Equity Tier 1 requirement for D-SIBs has already been phased-in from April 1, 2016
  • The Reserve Bank had issued the Framework for dealing with D-SIBs in July 22, 2014 (Reuters)Premium
    The Reserve Bank had issued the Framework for dealing with D-SIBs in July 22, 2014 (Reuters)

    MUMBAI : The Reserve Bank on Thursday said SBI, ICICI Bank and HDFC Bank will have to comply with additional capital requirement norms by April 1 as the banks continue to remain 'too big to fail' lenders, referred to as D-SIB or domestic systemically important bank.

    SIBs are subjected to higher levels of supervision so as to prevent disruption in financial services in the event of any failure.

    "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," the central bank said.

    The additional CET1 core capital requirement in case of the State Bank of India applicable from April 1 has been prescribed at 0.6% of Risk Weighted Assets (RWAs) while for the other two banks it is 0.4%.

    The Reserve Bank had issued the Framework for dealing with D-SIBs in July 22, 2014. The D-SIB framework requires the RBI to disclose the names of banks designated as D-SIBs starting from 2015 and place these banks in appropriate buckets depending upon their Systemic Importance Scores (SISs).

    Based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it.

    SIBs are seen as 'too big to fail (TBTF)', creating expectation of government support for them in times of financial distress. These banks also enjoy certain advantages in funding markets.

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    This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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    Published: 14 Mar 2019, 06:22 PM IST
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