RBI Retains SBI, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs)

The Reserve Bank of India (RBI) has reaffirmed that State Bank of India (SBI), HDFC Bank, and ICICI Bank will continue to remain India’s Domestic Systemically Important Banks (D-SIBs) for 2025. This classification identifies institutions that are “too big to fail,” reflecting their critical role in the Indian financial system.

What Are Systemically Important Banks?

Systemically important banks are institutions whose:

• Size
• Cross-border presence
• Complexity of operations
• Interconnectedness
• Lack of substitutability

makes them central to the functioning of the economy. If such banks fail, they pose a serious risk to financial stability, service delivery, and economic activity.

These banks are therefore mandated to hold higher levels of capital to absorb losses and avoid destabilizing failures.

Additional Capital Requirements for 2025

Under the D-SIB capital framework, banks are placed in buckets based on systemic importance scores. Each bucket attracts an additional Common Equity Tier-1 (CET1) requirement over and above the Capital Conservation Buffer.

2025 Bank-wise Capital Surcharge Requirements

Thus, SBI bears the highest additional capital charge, followed by HDFC Bank and ICICI Bank.

These capital buffers help strengthen the ability of these banks to withstand shocks and protect depositors and the system.

Background and Evolution of the D-SIB Framework

The D-SIB regulatory framework was introduced on July 22, 2014, and revised on December 28, 2023.

Key features of this framework include:

1. Identification and public disclosure of D-SIBs.
2. Scoring and bucketing based on Systemic Importance Scores (SIS).
3. Application of additional CET1 capital requirements based on the assigned bucket.

RBI first designated SBI and ICICI Bank as D-SIBs in 2015 and 2016, followed by HDFC Bank in 2017.

The 2025 update is based on bank data as of March 31, 2025, reaffirming previous classifications and maintaining their existing buckets.

Link with Global Regulation: G-SIB Provision

If any foreign bank operating in India is declared a Global Systemically Important Bank (G-SIB) by its home regulator, it must also maintain proportional CET1 surcharge in India.

This surcharge is calculated based on:

• Additional CET1 prescribed by its home country regulator

• Proportion of its Risk-Weighted Assets (RWAs) that belong to India
  This ensures harmonized supervisory compliance across jurisdictions.