RBI Identifies Major Indian Banks as Systemically Important

The Reserve Bank of India has identified State Bank of India, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks in its 2025 list. These banks have been classified under the same bucketing structure as previous years.

The additional Common Equity Tier 1 capital requirement is set at 0.80% for State Bank of India, 0.40% for HDFC Bank, and 0.20% for ICICI Bank, based on their Risk Weighted Assets. This additional CET1 requirement will be in addition to the Capital Conservation Buffer as stated in the RBI's circular.

The framework for Domestic Systemically Important Banks was established to enhance the stability of the financial system and requires the RBI to disclose the names of D-SIBs starting from 2015, placing them in appropriate buckets based on their Systemic Importance Scores.

The additional CET1 requirement is imposed on these banks to ensure they maintain sufficient capital buffers to absorb potential losses. If a foreign bank operating in India is classified as a Global Systemically Important Bank, it must adhere to additional CET1 capital surcharges that are proportionate to its Risk Weighted Assets in India.

This approach ensures that banks are adequately capitalized, enhancing their resilience in times of financial stress. The current update by the RBI is based on data collected from these banks as of March 31, 2025.

The designation of SBI, HDFC Bank, and ICICI Bank as D-SIBs highlights their significant roles in the Indian banking sector and the broader economy, emphasizing the importance of regulatory oversight for these institutions.

SBI and ICICI Bank were first designated as D-SIBs in 2015 and 2016 respectively, while HDFC Bank received its classification in 2017. This continued recognition underlines their systemic importance within the Indian financial landscape.