The Reserve Bank of India (RBI) on Wednesday said State Bank of India (SBI), HDFC Bank and ICICI Bank remain domestic systemically important banks (D-SIBs). SBI and HDFC Bank are expected to maintain additional capital cushion from April 2025, it said.

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 to be “too big to fail.”

THE RBI had published a framework for dealing with BISNs in July 2014, in which it named designated banks and placed them in appropriate “categories” based on their systemic importance. Inclusion in the list requires lenders to maintain higher Common Equity Tier 1 (CET1) capital in addition to the capital conservation buffer depending on the tranche in which they have been classified.

SBI And ICICI Bank were classified as D-SIB in 2015 and 2016. Although HDFC Bank was added to the list in 2017, it was moved to a higher bracket in December 2023 following its merger with parent company HDFC.

SBI continues to be in tranche 4, which will require the country’s largest lender to maintain an additional CET1 of 0.80 per cent, as per the listing. HDFC Bank, the largest private sector lender, continues to be placed in tranche 2, in which it will have to maintain a higher CET1 of 0.40 per cent.

The central bank said that the higher D-SIB surcharge for SBI and HDFC Bank will be applicable from April 1, 2025. “Therefore, till March 31, 2025, the D-SIB surcharge applicable to SBI and HDFC Bank will be of 0.60% and 0.20%, respectively,” he said.

ICICI Bank is classified in Band 1, where the second largest private sector lender will have to maintain an additional 0.20% in CET1 buffers.