According to the RBI, domestic systemically important banks (D-SIBs), or organisations that are “too large to fail,” continue to include private sector lenders ICICI Bank and HDFC Bank as well as state-owned SBI.
SIBs are thought of as “too large to fail” (TBTF) banks. This understanding of TBTF breeds an expectation that the government will assist these lenders when they are in trouble. As a result, these banks have an advantage in the funding markets.
After being phased in beginning on April 1, 2016, the increased Common Equity Tier 1 (CET1) requirement for D-SIBs went into effect fully on April 1, 2019.The capital conservation buffer will be in addition to the extra CET1 requirement.
SBI and ICICI Bank were designated as D-SIBs by the Reserve Bank of India (RBI) in 2015 and 2016. As of March 31, 2017, HDFC Bank was also categorised as a D-SIB based on information gathered from banks.Based on information gathered from banks as of March 31, 2022, the most recent update was created.
The guidelines for handling D-SIBs were released in July 2014. Starting in 2015, the framework mandates that the RBI publish the names of banks classified as D-SIBs and classify these lenders into the relevant buckets based on their Systemic Importance Scores (SISs).
There may be an additional common equity requirement for a D-SIB depending on the bucket it is assigned to.The Additional Common Equity Tier 1 requirement is 0.2% for ICICI Bank and HDFC Bank and 0.6% for SBI as a proportion of Risk Weighted Assets (RWAs).
