Definition
Domestic Systemically Important Bank (D-SIB)
A Domestic Systemically Important Bank is a bank the RBI designates as too big to fail, subjecting it to extra capital requirements and oversight.
The RBI annually identifies D-SIBs based on size, interconnectedness and complexity, and places them in buckets with escalating additional CET1 requirements. In India, SBI, HDFC Bank and ICICI Bank have been designated D-SIBs.
The label reflects that the failure of such a bank would disrupt the wider financial system, so they must hold a capital surcharge above ordinary banks. D-SIB status signals systemic importance but also heightened regulatory scrutiny and resilience expectations.
Related terms
- Capital Adequacy Ratio (CAR / CRAR)The Capital Adequacy Ratio, also called CRAR, is the ratio of a bank's capital to its risk-weighted assets, measuring its ability to absorb losses.
- Common Equity Tier 1 (CET1)Common Equity Tier 1 is the highest-quality bank capital, consisting of paid-up equity shares, share premium and retained earnings, net of regulatory deductions.
- Basel III NormsBasel III is the global bank regulation framework, adopted by the RBI, that strengthens capital quality, adds liquidity and leverage standards, and introduces capital buffers.
- Capital Conservation Buffer (CCB)The Capital Conservation Buffer is an extra layer of CET1 capital banks must hold above the regulatory minimum, breaching which restricts dividend payouts.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.