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Global Systemically Important Banks (G-SIBs)

By Amigos IAS

Why is it in the news?

  • The Financial Stability Board (FSB) has released its 2023 list of Global Systemically Important Banks (G-SIBs), identifying key institutions crucial to global financial stability, with implications for enhanced regulatory oversight.
  • No Indian bank is included in the G-SIBs list.

 

About G-SIB

  • A bank whose systemic risk profile is so significant that its failure could trigger a broader financial crisis and jeopardize the global economy.
  • Placed in five buckets, each corresponding to required levels of additional capital buffers.

 

Selection Criteria for G-SIBs

  • G-SIBs are required to maintain a higher capital buffer.
  • The bank’s ability to absorb losses.
  • Assessing the ease with which the bank can be resolved in case of failure.
  • Meeting elevated supervisory standards.

 

 

Domestic Systemically Important Banks (D-SIBs)

 

  • Framework for D-SIBs introduced in 2014 by the Reserve Bank of India (RBI).
  • Similar to G-SIBs, D-SIBs in India are categorized into five different buckets.
  • SBI falls under Bucket 3, while ICICI Bank and HDFC Bank are listed as D-SIBs in Bucket 1.
  • D-SIBs are required to maintain additional CET1 requirements ranging from 0.20% to 0.80% of RWA.

 

About FSB

·       Established in 2009, endorsed by the G-20.

·       Successor to the Financial Stability Forum.

·       Headquarters: Basel, Switzerland.

·       Role: International body monitoring and making recommendations about the global financial system.

·       India is a member of FSB, contributing to global financial stability.

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