Mumbai, (IANS) The Reserve Bank of India (RBI) on Thursday once again declared State Bank of India and ICICI Bank as the two most ‘Domestic Systemically Important Banks’ for the stability of the financial system of the country.
“The Reserve Bank of India has identified State Bank of India (SBI) and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) in 2016,” the central bank said in a statement.
The two banks have been named as D-SIBs for the second time, which means they are too huge to fail and their functioning is integral for the functioning of the Indian financial sector and failure could lead to the system’s collapse.
RBI had announced the two banking majors as D-SIBs for the first time in 2015 based on the framework it issued in 2014. Initially the plan was to announce 4-6 banks under D-SIBs.
According to the framework, SBI will have to maintain an additional capital requirement of 0.6 per cent of of its risk weighted assets while ICICI Bank will have to maintain an additional 0.2 per cent.
“The additional Common Equity Tier 1 (CET1) requirement for these banks has already been phased-in from April 1, 2016 and would become fully effective from April 1, 2019,” the statement added.