Which one of the following banks has not been identified as Domestic Systematically Important Banks (D-SIBs) by RBI?


2019-07-20 | Team PendulumEdu

Options:

A. ICICI Bank

B. Kotak Mahindra Bank

C. HDFC Bank

D. State Bank of India

Explanation:

Reserve Bank of India (RBI) has released the 2018 list of Domestic Systematically Important Banks (D-SIBs) in which SBI has been placed in bucket three while ICICI Bank and HDFC Bank in bucket 1.

D-SIBs are those banks that are systematically so important that their failure could cause interference in the essential services provided by the banks, thereby, disrupting the economic activities. RBI categorizes these banks as important due to their large size, cross-jurisdictional activities, complexity, lack of substitutability, and interconnectedness. 

Kotak Mahindra Bank, ICICI Bank, SBI and HDFC Bank are also the Big four Banks of India. Big Four Banks refer to those banks which have one or more of the following characteristics:

  1. Large in terms of market capitalization and total assets
  2. Having a wider presence in the global market
  3. Large customer base in the domestic as well as international market
  4. Too big to fail- can cause turmoil in the economy of a nation
  5. Banks having a score more than the cutoff level set by Basel Committee on Banking Supervision

Hence, b is the correct answer.

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