RBI retains SBI, HDFC, ICICI in the too-big-to-fail-banks list

Reserve Bank Retains SBI, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks

The Reserve Bank has retained State Bank of India, HDFC Bank, and ICICI Bank as domestic systemically important banks (D-SIBs) in the 2025 list, a classification that demands higher capital allocation based on their risk-weighted assets.

D-SIB Classification and Capital Requirements

• State Bank of India (SBI) has been in the list since 2015 and is placed in bucket 4, requiring an additional CET1 capital requirement of 0.80% of its risk-weighted assets (RWAs).
• HDFC Bank, the second-largest lender in the country, is in bucket 2, with an additional CET1 requirement of 0.40% of its RWAs.
• ICICI Bank, the third-largest bank, is in bucket 1, with an additional CET1 requirement of 0.20% of its RWAs.

The additional CET1 requirement for these D-SIBs will be in addition to the capital conservation buffer, as mandated under the Basel III norms.

Reasons Behind the Classification

The Reserve Bank had issued the framework for dealing with domestic systemically important banks on July 22, 2014, and subsequently updated it on December 28, 2023.

• The D-SIB framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs starting from 2015.
• The framework also places these banks in appropriate buckets depending on their systemic importance scores.
• The classification is based on the data collected from banks as of March 31, 2025.

No Foreign Lenders Classified as D-SIBs

No foreign lender has been classified as a global systemically important bank (G-SIB) in India, as no overseas bank has a significant retail banking presence in the country.

• Only DBS Bank of Singapore has a robust branch banking presence in India, but it operates under the wholly-owned subsidiary route.
• The British lenders, Stanchart and HSBC, have minimal branch banking presence in the country.

The Reserve Bank's decision is aimed at ensuring the stability and resilience of the banking system in India.