The Reserve Bank of India has said that up to six banks will be designated as systemically important, or SIBs, for the domestic financial market and will need to have higher capital than their peers to prevent the financial system from collapsing if there is a crisis.
The central bank said it would now go about identifying these banks which are too big to fail and would release a list of names in August 2015, according to a report uploaded on its website on Tuesday evening.
Banking regulators across the world are tightening capital norms for banks and other key financial institutions as the lack of capital was seen as a root cause of the 2008 credit crisis that threatened to bring down the global financial system.
The central bank said it would now go about identifying these banks which are too big to fail and would release a list of names in August 2015, according to a report uploaded on its website on Tuesday evening.
Banking regulators across the world are tightening capital norms for banks and other key financial institutions as the lack of capital was seen as a root cause of the 2008 credit crisis that threatened to bring down the global financial system.
Although bankers were able to beat back tough capital norms in some instances, overall the regulators have managed to tighten a bit.
"Foreign banks are quite active in the derivatives market, and the specialised services provided by these banks might not be easily substituted by domestic banks," said RBI. "It is, therefore, appropriate to include a few large foreign banks also in the sample of banks to compute the systemic importance."
"Foreign banks are quite active in the derivatives market, and the specialised services provided by these banks might not be easily substituted by domestic banks," said RBI. "It is, therefore, appropriate to include a few large foreign banks also in the sample of banks to compute the systemic importance."
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