RBI recently announced that State Bank of India, ICICI Bank, and HDFC Bank continue to be identified as systemically important banks in India. The additional common equity tier 1 requirement as a percentage of risk-weighted assets is 0.6% for the State Bank of India while this requirement is 0.2% for HDFC Bank and ICICI Bank; this capital requirement will be in addition to the capital conservation buffer.
The additional common equity tier 1 requirement for domestic systemically important banks was phased-in from April 01, 2016 and became fully effective from April 01, 2019. RBI had issued the framework for domestic systemically important banks on July 22, 2014. This framework requires RBI to disclose the names of banks designated as domestic systemically important banks and place these banks in appropriate buckets, depending on their Systemic Importance Scores. Based on the bucket in which such a bank is placed, an additional common equity requirement has to be applied to it. In case a foreign bank with a branch in India is a global systemically important bank or G-SIB, it has to maintain additional common equity tier 1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its risk-weighted assets in India.
Keywords: Asia Pacific, India, Banking, D-SIBs, Basel, Regulatory Capital, Systemic Risk, RBI
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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