The Reserve Bank of India (RBI) has reaffirmed State Bank of India (SBI), HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) under the same structure as the previous year’s list. These D-SIBs, commonly referred to as “too big to fail,” are subject to additional regulatory requirements aimed at safeguarding the financial system from risks associated with their scale and interconnectivity.
According to the latest framework, SBI remains in Bucket 4 with an additional Common Equity Tier 1 (CET1) capital requirement of 0.80% of its Risk-Weighted Assets (RWAs), while HDFC Bank falls into Bucket 2 with a 0.40% requirement, and ICICI Bank in Bucket 1 with a 0.20% requirement. Notably, the higher D-SIB surcharges for SBI and HDFC Bank—0.80% and 0.40%, respectively—will take effect from April 1, 2025; until then, these surcharges will be 0.60% and 0.20%, respectively, through March 31, 2025.
The RBI framework
The RBI’s framework for D-SIBs, first introduced in 2014, mandates disclosure of these banks’ names and classification based on their Systemic Importance Scores (SISs). The SIS classification determines the additional CET1 capital requirement, which must be held beyond the standard capital conservation buffer to mitigate systemic risks.
This framework also covers foreign banks operating in India if they are designated as Global Systemically Important Banks (G-SIBs) by their home regulator, requiring them to maintain CET1 capital buffers in India proportional to their RWAs.
SBI and ICICI Bank were initially designated as D-SIBs in 2015 and 2016, respectively, followed by HDFC Bank in 2017. The current assessment, based on data as of March 31, 2024, reaffirms the critical role these three banks play in maintaining India’s financial stability.
