RBI reshuffles classification of domestic systemically important banks; SBI, HDFC Bank move to higher buckets
Also Read: India's financial regulators fostering shock-resilient systems: RBI Governor Shaktikanta Das 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, according to the central bank.
Since the higher D-SIB surcharge for SBI and HDFC Bank will be applicable from April 1, 2025, hence, up to March 31, 2025, the D-SIB surcharge applicable to SBI and HDFC Bank will be 0.60 per cent and 0.20 per cent respectively. 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, according to the central bank. 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. The current update is based on the data collected from banks as on March 31, 2023 and factoring in the increased systemic importance of HDFC Bank post the merger of erstwhile HDFC Limited into HDFC Bank on July 1, 2023.Milestone Alert!
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