India cenbank retains SBI, HDFC Bank, ICICI Bank in too-big-to-fail list
MUMBAI, Nov 13 (Reuters) -India's central bank on Wednesday said the State Bank of India SBI.NS, HDFC Bank HDBK.NS and ICICI Bank ICBK.NS remain the three domestic systemically important banks (D-SIBs) and that the first two would need to maintain an additional capital buffer starting April 2025.
Systemically important banks are financial institutions whose failure or distress could trigger a broader financial crisis and threaten the stability of the entire financial system. These institutions are also perceived as being "too big to fail".
The Reserve Bank of India had issued a framework for dealing with D-SIBs in July 2014, under which it named the designated banks and placed them in appropriate "buckets" depending on their systemic importance.
A higher bucket requires higher the bank to maintain a larger capital buffer, along with other financial metrics.
SBI and ICICI Bank were classified as D-SIBs in 2015 and 2016. While HDFC Bank was added to the list in 2017, it was moved to a higher bucket in December 2023 following its merger with parent HDFC.
The RBI said that SBI and HDFC Bank have to set a higher additional capital buffer and capital surcharge from the next financial year which begins on April 1, 2025.
SBI's additional capital requirement will increase by 20 basis points to 0.80% in proportion to its risk-weighted assets, from 0.60% currently.
Meanwhile, HDFC Bank will be required to maintain a capital surcharge of 0.40% in proportion to its risk-weighted assets, up from 0.20% currently.
Reporting by Siddhi Nayak; Editing by Varun H K
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