SBI, HDFC Bank, ICICI Bank continue to be systemically important: RBI

Nov 13, 2024

RBI had classified SBI and ICICI Bank as domestic systemically important banks (D-SIBs) in 2015 and 2016, respectively. In 2017, HDFC Bank was also classified as a D-SIB

The Reserve Bank of India (RBI) said on Wednesday that State Bank of India (SBI), HDFC Bank, and ICICI Bank remain classified as systemically important banks, with SBI and HDFC Bank required to maintain additional capital buffers starting April 2025.

From April 1, 2025, SBI’s additional capital requirement will increase by 20 basis points (bps) to 0.80 per cent of its risk weighted assets from the current 0.60 per cent. Similarly, HDFC Bank’s additional capital requirement will increase by the same quantum to 0.40 per cent of its risk weighted assets from 0.20 per cent currently.

Systemically important banks are those considered too big to fail due to their size, cross-jurisdictional activities, complexity, lack of substitutability, and interconnectedness. The disorderly failure of these banks has the potential to cause significant disruption to the essential services they provide to the banking system, and in turn, to the overall economic activity.

RBI had classified SBI and ICICI Bank as domestic systemically important banks (D-SIBs) in 2015 and 2016, respectively. In 2017, HDFC Bank was also classified as a D-SIB.

The D-SIB framework, issued by RBI in 2014, requires the central bank to disclose the names of banks designated as D-SIBs and place these banks in appropriate buckets based on their Systemic Importance Scores (SISs).

Depending on the bucket in which a D-SIB is placed, an additional common equity requirement is applied to it.

[The Business Standard]