SBI, ICICI, HDFC Bank remain key banks: RBI

The Reserve Bank of India (RBI) on Tuesday said that State Bank of India (SBI), ICICI Bank, and HDFC Bank continue to be identified as domestic systemically important banks (D-SIBS) or institutions which are too big to fail. D-SIBs are subjected to higher levels of supervision so as to prevent disruption in financial services in the event of any failure. Being named as systemically important imposes additional capital requirements for the lenders.

The additional common equity tier 1 (CET1) requirement for D-SIBs was phased-in from April

1, 2016 and became fully effective from April 1,

2019. The additional CET1 requirement will be over and above the capital conservation buffer. The additional CET1 requirement as a percentage of risk weighted assets (RWAs) for SBI is 0.60 per cent, while it is 0.20 per cent for HDFC Bank and ICICI Bank, said the central bank.

The

RBI's D-SIB framework requires it to disclose the names of banks designated as D-SIBs starting from 2015 and place these banks in appropriate buckets depending upon their Systemic Importance Scores (SISs). Based on the bucket in which a DSIB is placed, an additional common equity requirement has to be applied to it. In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its risk weighted assets in India.

The Reserve Bank had announced SBI and ICICI Bank as D-SIBs in 2015 and 2016. Based on data collected from banks as on March 31, 2017,

HDFC Bank was also classified as a D-SIB, along with SBI and ICICI Bank. The current update is based on the data collected from banks as on March 31, 2021. While private sector lenders ICICI Bank and HDFC Bank fall under bucket 1, SBI falls under bucket 3.