State Bank, ICICI And HDFC Banks Remain Systematically Important: RBI

Reserve Bank of India (RBI) has said that the country's biggest lender State Bank of India (SBI) as well as private banks like HDFC and ICICI continue to be Domestic Systemically Important Banks (D-SIBs) or entities which are 'too big to fail'.

"SBI, ICICI Bank and HDFC Bank continue to be identified as Domestic Systemically Important Banks (D-SIBs), under the same bucketing structure as in the 2020 list of D-SIBs," the central bank said in a statement.

Since SIBs are considered as "safe" institutions, therefore they build a perception of getting government's support in times of financial stress, and because of this they get some advantage in the markets.

The additional Common Equity Tier 1 (CET1) requirement for D-SIBs was phased-in from April 1, 2016 and became fully effective from April 1, 2019.

The additional CET1 requirement will be in addition to the capital conservation buffer.

RBI had declared 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.

The current update is based on data collected from banks as on March 31, 2021.

The framework for dealing with D-SIBs was issued in July 2014.

The framework requires the RBI to disclose the names of banks designated as D-SIBs starting from 2015 and place these lenders in appropriate buckets depending upon their Systemic Importance Scores (SISs).