SBI, ICICI, HDFC Bank continue to be systemically important banks

Lenders regarded as too big to fail; classification based on data they gave in March 2022

banks
BS Reporter Mumbai
2 min read Last Updated : Jan 02 2023 | 11:08 PM IST
State Bank of India (SBI) and privately owned ICICI Bank and HDFC Bank continue to be Domestic Systemically Important Banks (D-SIBs) or institutions that are too big to fail, said the Reserve Bank of India (RBI) on Monday.

It’s the structure followed in 2021: ICICI Bank and HDFC Bank fall under bucket 1 and SBI falls in bucket 3. The classification is based on data collected from the banks as on March 31, 2022.

Under bucket 1, banks require 0.2 per cent of additional common equity Tier 1 (CET1) capital as a percentage of risk weighted assets (RWAs). Banks under bucket 3 require 0.6 per cent of CET1 capital as a percentage of RWAs.

The additional CET1 requirement will be in addition to the capital conservation buffer.

Systemically important banks are regarded as too big to fail, creating the belief that the government will support them in distress.

In 2015 and 2016, RBI had classified SBI and ICICI Bank as D-SIBs. Further, based on data collected from banks as on March 31, 2017, HDFC Bank was also classified as a D-SIB, along with SBI and ICICI Bank.

The RBI guidelines say based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it. In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional common equity Tier 1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its RWAs in India.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :Reserve Bank of IndiasbiICICI Bank HDFC BankBanking sector

Next Story