MUMBAI: TThe Reserve Bank of India (RBI) announced on Monday that State Bank of India (SBI), ICICI Bank, and HDFC Bank are still considered Domestic Systemically Important Banks (D-SIBs).
This means that these banks are considered "too big to fail" and are expected to receive government support in times of financial distress. As a result, these banks have certain advantages in the funding markets.
"SBI, ICICI Bank and HDFC Bank continue to be identified as Domestic Systemically Important Banks (D-SIBs), under the same bucketing structure as in the 2021 list of D-SIBs," the Reserve Bank said in a statement.
In a way, these banks are considered essential for the stability of the financial system in India.
The RBI first designated SBI and ICICI Bank as D-SIBs in 2015 and 2016, respectively, and HDFC Bank was classified as a D-SIB based on data from March 31, 2017.
The current update is based on data from March 31, 2022.
Under the framework for dealing with D-SIBs, which was issued in 2014, the RBI is required to disclose the names of D-SIBs and place them in appropriate buckets based on their Systemic Importance Scores (SISs).
The additional Common Equity Tier 1 (CET1) requirement for D-SIBs, which is an additional capital requirement, was phased in starting April 1, 2016 and became fully effective on April 1, 2019.
The CET1 requirement for SBI is 0.6% of Risk Weighted Assets, while it is 0.2% for ICICI Bank and HDFC Bank. This requirement is in addition to the capital conservation buffer.
