The Reserve Bank of India (RBI) has once again identified State Bank of India (SBI), HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs), according to an announcement made on December 2. The designation underscores the critical role these institutions play in the country’s financial stability due to their size, reach, and interconnected operations.
Banks falling under the D-SIB category are mandated to maintain additional capital buffers beyond standard regulatory requirements. As per the latest classification, the additional Common Equity Tier-1 (CET1) capital requirements stand at 0.10% for ICICI Bank, 0.40% for HDFC Bank, and 0.80% for SBI, calculated over their risk-weighted assets and applied on top of the Capital Conservation Buffer.
India’s D-SIB framework, introduced in 2014, mandates annual disclosures identifying systemically important banks and placing them into graded buckets based on their Systemic Importance Scores. Higher-tier buckets attract progressively stringent capital surcharges to ensure resilience in the event of financial stress.
The framework also applies to foreign banks operating in India that are deemed Global Systemically Important Banks (G-SIBs) in their home jurisdictions. Such institutions must maintain an additional CET1 capital buffer in India proportional to their local risk-weighted assets, reflecting the global capital surcharge applicable to their parent entity.
Summary
- SBI, HDFC Bank, and ICICI Bank have been reaffirmed as Domestic Systemically Important Banks by the RBI.
- These banks must maintain additional CET1 capital buffers of:
- 0.80% – SBI
- 0.40% – HDFC Bank
- 0.10% – ICICI Bank
- The D-SIB framework ensures stronger capital adequacy for banks critical to India’s financial system.
- The rule also applies to foreign G-SIBs operating in India, requiring proportional additional capital buffers locally.
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