SBI, HDFC Bank, ICICI ‘too-big-to-fail’ banks of India: RBI

NEW DELHI: State Bank of India, ICICI Bank and HDFC Bank remain the country's ‘too-big-too-fail’ banks, a concept that gained prominence in the aftermath of the global financial crisis.

"SBI, ICICI Bank, and HDFC Bank continue to be identified as domestic-systemically important banks, under the same bucketing structure as in the 2018 list," the Reserve Bank of India said.

Such classification, indicating that collapse of these lenders might impact the wider financial markets, was introduced by the central bank in 2014.

Since then, SBI and ICICI Bank have been identified as systemically important five times and HDFC Bank thrice.

Considering their importance, the banks identified have to keep aside more core equity capital than the 5.5% level prescribed for other banks.

The amount of additional common equity tier-I capital depends on which bucket they are placed in, which in turn hinges on the systemic important scores.

SBI, which remains in the third bucket, has to maintain additional core equity capital 60 basis points more than other banks. Being in the first bucket, the additional capital requirement for ICICI Bank and HDFC Bank is 20 bps.

The additional capital requirement is over and above the capital conservation buffer.