SBI, HDFC Bank, ICICI Bank In RBI's Too Big To Fail Lenders List Of 2020

On January 19, 2021, the central Bank said SBI, HDFC Bank and ICICI Bank will continue to be ranked among Domestic Systemically Important Banks (D-SIBs) or what is commonly called as lenders that are 'too-big-to-fail'. This it said while announcing the list of D-SIBs for the year 2020.

This list was first compiled in the year 2015 and included ICICI Bank and SBI and HDFC Bank made its mark in the list later in 2017. 'Too-big-to-fail' lenders are banks whose failure by any means could impact the overall financial system owing to their size and interconnectedness. And such D-SIBs banks need to comply with additional capital requirements. The additional Common Equity Tier 1 (CET1) requirement for D-SIBs was phased-in from April 1, 2016 and became fully effective from April 1, 2019.

Now as per the apex lender, the additional common equity Tier 1 requirement as a percentage of Risk Weighted Assets (RWAs) for SBI is 0.6 per cent and that of other two lenders is 0.2 per cent. And as per the schema, the RBI is required to place these banks in appropriate buckets based on the assessment of their Systemic Importance Scores (SISs).

"In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its Risk Weighted Assets (RWAs) in India, i.e., additional CET1 buffer prescribed by the home regulator (amount) multiplied by India RWA as per consolidated global Group books divided by total consolidated global Group RWA," the RBI said.

Current update is based on the data collected from banks as of March 31, 2020.

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