RBI Maintains SBI, HDFC Bank, and ICICI Bank as D-SIBs
The Reserve Bank of India (RBI) has confirmed that State Bank of India (SBI), HDFC Bank, and ICICI Bank will continue to be classified as Domestic Systemically Important Banks (D-SIBs), with an increase in additional capital requirements for SBI and HDFC Bank starting April 2025. The D-SIB framework, introduced by RBI in 2014 and updated in 2023, designates these banks as too significant to fail due to their size, complexity, and interconnectedness in the financial system. These banks are subject to higher capital buffers to ensure financial stability.
SBI, HDFC Bank, and ICICI Bank Status: These three banks remain D-SIBs, as initially identified by RBI in 2015 (SBI), 2016 (ICICI), and 2017 (HDFC Bank).
Capital Buffer Adjustments: SBI’s additional Common Equity Tier 1 (CET1) requirement will rise to 0.80% of risk-weighted assets (RWAs) from 0.60% in 2025. Similarly, HDFC Bank’s CET1 will increase to 0.40% from 0.20%.
Purpose of D-SIBs: Banks classified as D-SIBs are crucial for maintaining financial stability. Their failure could disrupt essential banking services and have widespread economic consequences.
Capital Requirements: The CET1 capital surcharge is applied in addition to the capital conservation buffer, ensuring these banks remain financially resilient in case of a crisis.
Updated D-SIB List for 2024: As part of its ongoing monitoring, RBI has released the updated list for 2024, maintaining the D-SIB status of these banks.
From April 1, 2025, the increased CET1 requirement for SBI and HDFC Bank will ensure that they are better capitalized to handle financial stress, contributing to the overall stability of the Indian banking system.
| Why in News | Key Points |
|---|
| RBI retains SBI, HDFC Bank, and ICICI Bank as D-SIBs | SBI, HDFC Bank, and ICICI Bank continue as Domestic Systemically Important Banks (D-SIBs). |
| Additional Capital Buffers | SBI’s additional CET1 requirement will rise to 0.80%, HDFC Bank’s to 0.40% from April 2025. |
| Framework Issuance | The D-SIB framework was issued by RBI on July 22, 2014, and updated in December 2023. |
| SBI Classification | SBI was classified as D-SIB in 2015. |
| ICICI Bank Classification | ICICI Bank was classified as D-SIB in 2016. |
| HDFC Bank Classification | HDFC Bank was classified as D-SIB in 2017. |
| SIS (Systemic Importance Score) | Banks are categorized based on their Systemic Importance Scores (SISs). |
| Objective of D-SIB Classification | Banks deemed “too big to fail,” requiring extra capital buffers to prevent systemic disruption. |
| Capital Conservation Buffer | Additional CET1 capital buffer is over and above the capital conservation requirement. |
| RBI’s Annual Review | RBI reviews and discloses D-SIB classifications annually. |
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