The Reserve Bank of India (RBI) has announced State Bank of India (SBI), HDFC Bank and ICICI Bank to continue to be classified as Domestic Systemically Important Banks (D-SIBs). This designation underscores their role in maintaining financial system stability, as their distress or failure could have far-reaching consequences on the economy.
Starting April 2025, SBI and HDFC Bank will be required to maintain higher capital buffers as per their respective classifications under the D-SIB framework, originally introduced by the RBI in July 2014.
The key classifications are as follows:
SBI: Continues in Bucket 4, requiring an additional Common Equity Tier 1 (CET1) capital of 0.80 per cent.
HDFC Bank: Remains in Bucket 2, necessitating an additional CET1 buffer of 0.40 per cent.
ICICI Bank: Classified in Bucket 1, requiring a CET1 buffer of 0.20 per cent.
The central bank announced that the increased D-SIB surcharge for SBI and HDFC Bank will take effect from April 1, 2025. It stated that until 31st March, 2025, the D-SIB surcharge for SBI and HDFC Bank will remain at 0.60 per cent and 0.20 per cent, respectively.
The D-SIB framework aims to strengthen the resilience of these critical financial institutions. HDFC Bank, which joined the list in 2017, was moved to a higher bucket in December 2023 following its merger with parent HDFC. SBI and ICICI Bank have been part of the D-SIB list since 2015 and 2016, respectively.
