HDFC Bank, ICICI Bank, SBI are domestic systemically important lenders: RBI – World Affairs SRS

HDFC Bank, ICICI Bank, SBI are domestic systemically important lenders: RBI

– World Affairs SRS

The Reserve Bank of India (RBI) on Tuesday said State Bank of India (SBI), ICICI Bank and HDFC Bank continue to be identified as domestic systemically important banks (D-SIBs) or institutions, failing which are very big. While private sector lenders ICICI Bank and HDFC Bank come under Bucket 1, SBI comes under Bucket 3.

This current classification of banks as domestic systemically important banks is based on data collected from banks as on March 31, 2021.


Under Bucket 1, banks are required to have 0.2 percent of additional common equity Tier 1 capital as a percentage of risk weighted assets (RWA), and under Bucket 3, banks are required to have additional common equity Tier 1 capital as a percentage of RWA. 1 Requires 0.6 percent of capital.

Essentially, systemically important banks are those that are deemed too large to fail. Such a perception creates a need for government assistance for these banks in times of crisis.

Last year also, these three banks were identified as domestic systemically important banks and they were kept the same as this year. Earlier, in 2015 and 2016, RBI had classified SBI and ICICI Bank as D-SIBs. Further, on the basis of data collected from banks as on March 31, 2017, HDFC Bank was also classified as D-SIB along with SBI and ICICI Bank.

RBI guidelines state that an additional common equity requirement will have to be applied depending on the bucket in which the D-SIB is kept. If a foreign bank that has a branch in India is a Global Systemically Important Bank (G-SIB), it will have to maintain the Additional Common Equity Tier 1 capital surcharge as applicable in India as a G-SIB, which will be charged to its RWA. will be in proportion to. India.

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