Why rbi’s ‘too big to fail’ status can make sbi, icici stronger

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Why rbi’s ‘too big to fail’ status can make sbi, icici stronger"


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THE SPECIAL STATUS MAY MAKE THESE BANKS STRONGER The strict capital guidelines suggest that these banks will have to set aside more funds, at a time when lenders, especially the state-run


ones are battling bad debt and capital crunch. So effectively, these banks are being subjected to tighter rules and this is certainly not a mandate for them to be fiscally profligate. It is


possible, that through these measures, the credit profile of these banks will improve. This is the first time RBI has designated any bank as a Domestic Systematically Important Bank and it


will now be an annual practice. The selected banks so far will have to maintain the additional mandated capital from April 1, 2016 in stages, and fully from April 2019. DO THE BANKS HAVE


ADEQUATE CAPITAL? The heads of both banks say they have adequate capital. > SBI currently has a much higher level of Tier I at 9.62% as opposed > to 7.00% required under the current 


guidelines.  > — ARUNDHATI BHATTACHARYA, CHAIRPERSON, SBI ICICI is not expected to raise fresh equity funds for the next couple of years, said bank’s Managing Director and Chief Executive


Officer Chanda Kochhar.


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