Reserve Bank of India (RBI) to supervise and monitor 12 large banks to prevent any systemic fallout in case one of them falters

November 18, 2011: For optimising the supervisory resources and also to have a more focused attention on banks, which are systemically important, RBI has decided to reorganise the supervisory processes and the organisational structure of the Department of Banking Supervision (DBS).

The reorganisation of the Department was made effective from April 1, 2011, whereby a new division named Financial Conglomerate Monitoring Division (FCMD) was created to have a system of “close and continuous supervision” of 12 large and systemically important banking groups, which account for 52.7 per cent of the total assets of the banking system. This is to prevent any systemic fallout in case one of them falters.



Under the reorganised set up, the supervisory responsibility of FCMD would include exercising on-site and off-site supervision, and a more meaningful consolidated/conglomerate supervision of banking groups with a focus on group wide capital adequacy assessment, among others. FCMD will assess the risks that non-banking activities — insurance, asset/wealth management, broking, investment banking, housing finance, and primary dealership — could pose to the parent bank.

To ensure that the safety and soundness of the banking system is not compromised, the FCMD will actively monitor these banks' exposure to financial markets — such as call money, foreign exchange (including currency futures), government securities (including interest rate futures), corporate bonds and equities — to pick up possible smoke signals.

Financial Conglomerate Monitoring Division (FCMD) will supervise and monitor following 12 large banks in the country:



State bank of India.
Bank of Baroda.
Bank of India.
Canara Bank.
Punjab National bank.
Axis bank.
HDFC bank.
Kotak Mahindra bank.
ICICI bank.
Citi bank.
HSBC.
Standard Chartered bank.

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