The Reserve Bank of India on Tuesday released list of Domestic Systemcically Important Banks (D-SIBS) in India. State-owned SBI, along with private sector lenders ICICI Bank and HDFC Bank are declared as Domestic Systemically Important Banks (D-SIBs) or institutions which are ‘too big to fail’ as on March 31, 2020.
The Reserve Bank had announced State Bank of India and ICICI Bank Ltd. as D-SIBs on August 31, 2015 and August 25, 2016, respectively. The State Bank of India, ICICI Bank Ltd. and HDFC Bank Ltd. were announced as D-SIBs on September 04, 2017 and March 14, 2019 respectively. Current update is based on the data collected from banks as on March 31, 2020.
The D-SIB framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs starting from 2015 based on the data collected from the banks and place them in appropriate buckets of Systemic Importance Scores (viz.1%,0.80%,0.60%,0.40%,0.20%) based on the methodology provided in D-SIB framework .
Based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it. The additional CET1 requirement as a percentage of Risk-Weighted Assets (RWAs) in the case of the State Bank of India (SBI) is 0.60%, while for the ICICI and HDFC banks it is 0.20%.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, i.e., additional CET1 buffer prescribed by the home regulator (amount) multiplied by India RWA as per consolidated global Group books divided by total consolidated global Group RWA.