The RBI on Monday said state-owned SBI, along with private sector lenders ICICI Bank and HDFC Bank, continue to be domestic systemically important banks (D-SIBs) or institutions which are ‘too big to fail’.
SIBs are perceived as banks that are ‘too big to fail (TBTF)’. This perception of TBTF creates an expectation of government support to these lenders in times of distress. Due to this, these banks enjoy certain advantages in the funding markets.
“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 2021 list of D-SIBs,” the Reserve Bank said in a statement.
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.
The RBI had announced 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.
