Get Even More Visitors To Your Blog, Upgrade To A Business Listing >>

HDFC gets 'too big to fail' status from RBI

Tags: bank hdfc fail
HDFC gets 'too big to fail' status from RBI
05 Sep 2017
  • In 2015, the Reserve Bank of India had classified the country's largest lender SBI and private sector major ICICI bank as D-SIB or domestic systemically important bank.
  • Now, it has included HDFC Bank in this list of 'too big to fail' lenders.
  • Therefore, as of now, there are three 'too big to fail' financial entities in the country spearheading its economy.
  • Here's more.

  • What does it mean?
  • SIBs, such as State Bank of India, ICICI Bank and now HDFC, are subjected to intense levels of supervision, as their failure would disrupt the entire banking system.
  • Therefore, these banks have to abide by a more rigorous regulation and capital requirement compared to other ones.
  • On the positive side, these banks are considered to be more secure by investors for parking bulk funds.

  • What are its effects?
  • SIBs are seen as 'too big to fail (TBTF)' institutions. Therefore, they are likely to get government support when they suffer from financial stress.
  • These banks are also given certain key advantages in funding markets to bolster their foundations.
  • However, analysts say that this expectation of government aid leads to reckless risk-taking tendencies and increases chances of distress in future.

  • Where does it stand?
  • According to reports, as of June 30, 2017, HDFC's total balance sheet size stands at Rs. 8,95,653 crore, which is a 33% increase from the Rs. 7,55,631 crore that was noticed on June 30, 2016.
  • The bank's deposits as of June 30, 2017, were Rs. 6,71,376 crore, 17% more from what was seen as of June 30, 2016.

  • This post first appeared on NewsBytes: Latest News, Breaking News India, Today News, Current News, please read the originial post: here

    Share the post

    HDFC gets 'too big to fail' status from RBI


    Subscribe to Newsbytes: Latest News, Breaking News India, Today News, Current News

    Get updates delivered right to your inbox!

    Thank you for your subscription