SBI, HDFC Bank will need to maintain higher capital from FY25, says RBI

Mumbai, Dec 28, 2023 

The additional Common Equity Tier 1 (CET1) requirement will be in addition to the capital conservation buffer 

State Bank of India (SBI), HDFC Bank, and ICICI Bank continue to be in the list of the domestic systemically important banks (D-SIBs) of the Reserve Bank of India, though the first two will require maintaining higher capital as they move up one notch in the ladder.

“While ICICI Bank continues to be in the same bucketing structure as last year, SBI and HDFC Bank move to higher buckets – SBI shifts from bucket 3 to bucket 4, and HDFC Bank shifts from bucket 1 to bucket 2,” RBI said in a statement.

SBI’s additional common equity Tier 1 (CET-1) requirement as a percentage of Risk Weighted Assets will be 0.80 per cent as compared to 0.60 per cent, while for HDFC Bank, it will be 0.40 per cent as compared to 0.20 per cent.

ICICI Bank will continue to have a CET1 requirement of 0.20 per cent of its risk-weighted assets.

For SBI and HDFC Bank, the higher D-SIB buffer requirements due to the bucket increase will be effective from April 1, 2025, RBI said.

The additional Common Equity Tier 1 (CET1) requirement will be in addition to the capital conservation buffer.

According to norms, there are five buckets, requiring additional CET1 as a percentage of RWA ranging from 0.2 per cent to 1 per cent.

D-SIBs are subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system.

[The Business Standard]