SBI cautiously welcomes RBI move on too big to fail banks

Tags: News
Country's largest bank SBI today cautiously welcomed the proposed steps by RBI for banks regarded as too big to fail.

"I welcome the step if it would make the financial world more secure," SBI Deputy Managing Director P K Malhotra said here on the sidelines of the ABP Group organised Infocom 2013, when asked about impact on the bank.

At the same time, he cautioned, "But it should not come at a cost which the financial world can't bear."

Malhotra said: "Nobody knows what shape it is getting."

He said that 'too big to fail' came during stressed times and it was a good thing that RBI was looking at such steps. "Let us see what comes out. It is very, very early."

Large banks such as the State Bank of India, ICICI Bank, HDFC Bank, Canara Bank and Punjab National Bank were likely to fall under this category of systemically important banks (D-SIBs) or too large to fail.

The Reserve Bank of India released draft rules planning to introduce increased capital requirements by 2016 for banks regarded as too big to fail and make them subject to greater regulatory oversight.

Banks classified under this category would be required to hold additional capital that would begin from April 2016 and would be implemented in phases until 2019.

The names of banks classified as D-SIBs would be disclosed in August every year, starting from 2015.

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