The Reserve Bank of India (RBI) said on Tuesday that state-owned SBI, as well as private sector lenders ICICI Bank and HDFC Bank, remain Domestic Systemically Important Banks (D-SIBs) or 'too large to fail' institutions.
SIBs are thought to be 'too big to fail (TBTF)' banks. In times of trouble, this perception of TBTF fosters an expectation of government assistance for these banks. These lenders benefit from particular advantages in the financial markets as a result of this impression.
"Under the same bucketing structure as in the 2020 list of D-SIBs, SBI, ICICI Bank, and HDFC Bank continue to be recognised as Domestic Systemically Important Banks (D-SIBs)," the Reserve Bank said in a statement.
The increased Common Equity Tier 1 (CET1) requirement for D-SIBs began on April 1, 2016 and was completely implemented on April 1, 2019. The capital conservation buffer will be supplemented by the increased CET1 requirement.
In 2015 and 2016, the Reserve Bank of India (RBI) designated SBI and ICICI Bank as D-SIBs. HDFC Bank was likewise categorised as a D-SIB based on data received from banks as of March 31, 2017. The most recent version is based on bank data obtained as of March 31, 2021. In July of 2014, a framework for dealing with D-SIBs was released.
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