The Reserve Bank of India (RBI) on Monday announced it has added private lender HDFC Bank to its list of “domestic systemically important banks” (D-SIBs) considered too big to fail. “In addition to the SBI (State Bank of India) and ICICI Bank, which continue to be identified as Domestic Systemically Important Banks (D-SIBs), the Reserve Bank of India has also identified HDFC Bank as a D-SIB, under the same bucketing structure as last year,” an RBI release said here.
The D-SIB categorisation imposes additional capital requirements on the banks classified as such. “The additional Common Equity Tier 1 (CET1) requirement for D-SIBs will become fully effective from April 1, 2019. The additional CET1 or core capital requirement will be in addition to the capital conservation buffer,” the statement said. “D-SIB surcharge for HDFC Bank will be applicable from April 1, 2018,” it added.
The RBI had issued the framework for dealing with D-SIBs in July 2014. With HDFC Bank’s inclusion, there are now three banks that are described as too big to fail, including state-run State Bank of India and private lender ICICI Bank.