In the Reserve Bank of India’s latest list of domestic systematically important banks (D-SIBs), State Bank of India (SBI) and HDFC Bank have moved up a ladder, implying that they will have to maintain higher capital.

ICICI Bank continued to be in the list but will occupy the same bucketing structure as last year.

“SBI and HDFC Bank move to higher buckets – SBI shifts from bucket 3 to bucket 4 and HDFC Bank shifts from bucket 1 to bucket 2,'' the RBI said today.

SBI’s additional common equity Tier 1 (CET-1) requirement as a percentage of Risk Weighted Assets will be 0.80% compared to 0.60% now. For HDFC Bank, it will be 0.40% as against 0.20% now.

ICICI Bank will continue to have a CET1 requirement of 0.20% of its risk-weighted assets.

SBI and HDFC Bank will get time to comply with the higher D-SIB buffer requirements as their bucket increase will be effective from 1 April 2025. 

The additional Common Equity Tier 1 (CET1) requirement will be in addition to the capital conservation buffer, according to the central bank.

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.

SBI and ICICI Bank were named as D-SIBs in 2015 and 2016. Based on data collected from banks as on 31 March 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 31 March 2023 and factoring in the increased systemic importance of HDFC Bank post the merger of erstwhile HDFC Limited into HDFC Bank on 1 July 2023.