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Q1: In the context of the Indian banking system, what does the designation Domestic Systemically Important Bank (D-SIB) primarily signify?

A
A bank that has the highest percentage of Non-Performing Assets (NPAs) in the domestic market.
B
A bank whose systemic importance is so significant that its failure would cause a massive disruption to essential services and the overall economy.
C
A bank that is exclusively owned by the Government of India and operates only within domestic borders.
D
A bank that is required to maintain a lower Credit-to-Deposit ratio than the industry average to ensure liquidity.
✅ Correct Answer: B
D-SIBs are perceived as "Too Big to Fail." This perception creates an expectation of government support during distress, which necessitates higher capital requirements and stricter supervision to offset the systemic risk they pose.
This defines the core concept of a Domestic Systemically Important Bank (D-SIB).
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