RBI names SBI, ICICI and HDFC as systemically important banks

Mumbai: The Reserve Bank of India (RBI) on Thursday named State Bank of India (SBI), ICICI Bank and HDFC Bank as Domestic Systemically Important Banks (D-SIBs), which in other words mean banks that are too big to fail.

As per the norms, these banks will have to set aside more capital for their continued operation. RBI comes with the list every year since 2015. Inclusion in D-SIB indicates that failure of any of these banks would have a cascading effect on Indian financial system.

Inclusion in the list gives additional comfort to investors that these banks won’t be allowed to fail and therefore, borrowing costs of these banks from the markets are cheaper than their peers.

SBI, being in the third bucket, was setting aside 0.45 per cent of its assets till 2018-19 as a surcharge. From next year, applicable from April 1, the bank will have to set aside 0.60 per cent of its risk-weighted assets. The increase in capital is in a phased manner, with the ultimate aim of providing one full percentage point extra as capital buffer for D-SIBs.

ICICI Bank and HDFC Bank’s capital requirement rises to 0.20 per cent, from 0.15 per cent now. These two banks are in the fifth basket, and are considered less important than SBI.