RBI IDENTIFIES SBI, HDFC BANK AND ICICI BANK AS DOMESTIC SYSTEMICALLY IMPORTANT BANKS (D-SIBs)

Introduction

The Reserve Bank of India has identified State Bank of India, HDFC Bank and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) under the 2025 list. The three banks continue to remain under the same bucketing structure as the previous year.The D-SIB framework is aimed at identifying banks whose failure could significantly impact the stability of the Indian financial system due to their size, interconnectedness and systemic importance.

DOMESTIC SYSTEMICALLY IMPORTANT BANKS (D-SIBs)

Meaning of D-SIBs

Domestic Systemically Important Banks are banks that are considered:

• “Too Big To Fail”
• critically important for the domestic financial system.

If such banks face financial distress or collapse, it can:

• disrupt the banking system,
• affect credit availability,
• create systemic financial instability,
• impact the broader economy.

Hence, RBI imposes additional regulatory safeguards on these banks.

BANKS IDENTIFIED AS D-SIBs IN 2025

The additional CET1 requirement will be maintained over and above the:

Capital Conservation Buffer (CCB)

CET1 REQUIREMENT

Common Equity Tier 1 (CET1)

CET1 represents the highest quality core capital of a bank, including:

• equity shares,
• disclosed reserves,
• retained earnings.

The RBI requires D-SIBs to maintain additional CET1 capital to:

• absorb unexpected losses,
• improve resilience,
• strengthen depositor confidence,
• reduce systemic risk.

RISK WEIGHTED ASSETS (RWAs)

The additional CET1 requirement is calculated as a percentage of:

Risk Weighted Assets (RWAs)

RWAs represent bank assets adjusted according to their risk profile.

Higher-risk assets:

• receive higher risk weights.

Safer assets:

• receive lower risk weights.

This ensures banks maintain sufficient capital against risky lending and investments.

D-SIB FRAMEWORK OF RBI

The RBI’s D-SIB framework requires:

• annual disclosure of D-SIB banks,
• classification of banks into different buckets,
• imposition of additional capital requirements based on Systemic Importance Scores (SIS).

SYSTEMIC IMPORTANCE SCORE (SIS)

Banks are placed into different buckets depending upon their:

Systemic Importance Score (SIS)

The score reflects:

• size of the bank,
• interconnectedness,
• substitutability,
• complexity,
• impact on the financial system.

Higher SIS:

→ Higher regulatory capital requirement.

FOREIGN BANKS AND G-SIB REQUIREMENT

The RBI circular also stated that:

if a foreign bank operating in India is designated as a:

Global Systemically Important Bank (G-SIB),

then it must maintain additional CET1 capital surcharge in India proportional to:

• its Risk Weighted Assets in India,
• and the surcharge prescribed by its home regulator.

The additional capital requirement is calculated using:

• India-specific RWAs,
• consolidated global group RWAs,
• global regulatory surcharge norms.

CHRONOLOGY OF D-SIB DESIGNATION

The 2025 classification is based on:

Data collected from banks as on March 31, 2025.

IMPORTANCE OF D-SIB FRAMEWORK

The framework helps:

• strengthen banking sector stability,
• reduce probability of bank failures,
• ensure adequate capital buffers,
• improve crisis preparedness,
• protect the financial system from systemic shocks.

It is a key component of India’s prudential banking regulation framework.

NECESSARY STATIC PART

Reserve Bank of India (RBI)

Common Equity Tier 1 (CET1)

Capital Conservation Buffer (CCB)

Updated - 02 December 2025 ; 10:45 PM | The Hindu