RBI Reaffirms SBI, HDFC Bank and ICICI Bank as D-SIBs: Capital Norms

RBI Confirms SBI, HDFC Bank and ICICI Bank as India’s Systemically Important Banks

The Reserve Bank of India has once again identified State Bank of India, HDFC Bank and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) , reaffirming their vital role in safeguarding the nation’s financial stability. The announcement underscores the critical position these institutions hold due to their extensive size, deep market integration and potential to impact the wider economy if disrupted.

Why D-SIB Status Matters

Banks labelled as D-SIBs are considered “too big to fail,” meaning their distress could significantly destabilise financial markets. To avert such risks, the RBI mandates stricter oversight and higher capital buffers for these institutions. The classification ensures that the most influential banks maintain robust shock-absorption capacity, protecting the financial system against cascading failures.

Enhanced Capital Requirements in Line with Global Norms

Under the D-SIB framework, these banks must maintain additional Common Equity Tier 1 (CET1) capital over and above the standard regulatory requirement and Capital Conservation Buffer. The move aligns India’s regulatory architecture with global Basel III standards, ensuring consistency in risk management and systemic resilience.

Bucket Ranking Reflects Systemic Footprint

RBI assigns each bank to a bucket based on its systemic importance:

• SBI – Bucket 4 (0.80% CET1 surcharge)

• HDFC Bank – Bucket 2 (0.40% CET1 surcharge)

• ICICI Bank – Bucket 1 (0.20% CET1 surcharge)

These rankings determine the level of extra capital each must maintain, reflecting their relative scale and interconnectedness within India’s financial network.

Exam Oriented Facts

• SBI, HDFC Bank and ICICI Bank are India’s D-SIBs for 2025.

• Additional CET1 requirements: SBI (0.80%), HDFC (0.40%), ICICI (0.20%).

• New capital norms become effective 1 April 2027 .

• The D-SIB framework in India was initiated in 2014 .

Strengthening Systemic Stability

Since SBI first entered the D-SIB list, followed by ICICI Bank and later HDFC Bank, the framework has become a cornerstone of India’s financial governance. By imposing higher capital and supervisory expectations, the RBI aims to reinforce systemic resilience, reduce contagion risks and preserve public confidence in the banking system—especially crucial in a growing and increasingly interconnected economy.