The Reserve Bank of India (RBI) issued 2023 list of Domestic Systemically Important Banks (D-SIBs) on December 27.
Key points
- RBI moved State Bank of India (SBI) and HDFC Bank to higher buckets, while ICICI Bank continues to be continues to be in the same bucketing structure as last year.
- SBI shifts from bucket 3 to bucket 4 and HDFC Bank shifts from bucket 1 to bucket 2. For SBI and HDFC Bank, the higher D-SIB buffer requirements on account of the bucket increase will be effective from April 1, 2025.
- The additional Common Equity Tier 1 (CET1) requirement will be in addition to the capital conservation buffer.
- The D-SIB framework requires the RBI 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 (SISs).
- Based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it.
- The central bank had announced SBI and ICICI Bank as D-SIBs in 2015 and 2016. 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.
- In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its Risk Weighted Assets (RWAs) in India.
