RBI says SBI, HDFC Bank, ICICI Bank remain domestic systemically important banks

Reserve Bank of India Identifies D-SIBs for Additional Capital Requirement

The Reserve Bank of India (RBI) has announced that State Bank of India, HDFC Bank, and ICICI Bank will continue to be classified as Domestic Systemically Important Banks (D-SIBs), as per a recent press release.

• State Bank of India: 0.80% Additional CET1 requirement as a percentage of Risk Weighted Assets (RWAs)
• HDFC Bank: 0.40% Additional CET1 requirement as a percentage of Risk Weighted Assets (RWAs)
• ICICI Bank: 0.10% Additional CET1 requirement as a percentage of Risk Weighted Assets (RWAs)

The RBI has released the 'Framework for dealing with Domestic Systemically Important Banks (D-SIBs)' on July 22, 2014. This framework requires the RBI to disclose the names of banks designated as D-SIBs starting from 2015, and place them in appropriate buckets based on their Systemic Importance Scores (SIS).

Based on the bucket in which a D-SIB is placed, an additional Common Equity Tier 1 (CET1) requirement is applied to it. In the case of foreign banks having a branch presence in India, which are Global Systemically Important Banks (G-SIBs), they must maintain an additional CET1 capital surcharge in India, proportionate to their Risk Weighted Assets (RWAs) in India.

• The RBI has designated State Bank of India, HDFC Bank, and ICICI Bank as D-SIBs.
• The additional CET1 requirement for D-SIBs will be in addition to the Capital Conservation Buffer.
• The RBI will disclose the names of D-SIBs starting from 2015 and place them in appropriate buckets based on their Systemic Importance Scores (SIS).

The RBI's D-SIB framework aims to ensure that systemically important banks maintain adequate capital buffers to mitigate systemic risk.