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The Reserve Bank of India (RBI) has announced that State Bank of India (SBI), HDFC Bank, and ICICI Bank will continue to be classified as the country's systemically important banks.
Systemically important banks are considered too big to fail due to their size, cross-jurisdictional activities, lack of substitutability and interconnectedness. Any failure of these banks has the potential to cause large-scale disruption to the essential services they provide to the banking system and overall economic activity.
The RBI issued a directive on Tuesday, requiring these banks to maintain additional capital requirements based on the D-SIB framework. The framework was issued in 2014 by the RBI and requires the central bank to disclose the names of banks designated as D-SIBs and place these banks in appropriate buckets depending upon their systemic importance scores (SISs).
The RBI had issued the 'Framework for dealing with Domestic Systemically Important Banks (D-SIBs)' on July 22, 2014, which was subsequently updated on December 28, 2023. The current update is based on the data collected from banks as on March 31, 2025, according to an official statement.
The D-SIB framework requires the Reserve Bank 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 (SIS). Based on the bucket in which a D-SIB is placed, an additional CET1 requirement has to be applied to it.
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