The Reserve Bank of India has identified State Bank of India (SBI) and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) in 2016 and has retained their bucketing structure as it was last year. The additional Common Equity Tier 1 (CET1) requirement for these banks has already been phased-in from April 1, 2016 and would become fully effective from April 1, 2019. The additional CET1 requirement will be in addition to the capital conservation buffer. The updated list of D-SIBs for 2016 is: | Bucket | Banks | Additional Common Equity Tier 1 requirement as a percentage of Risk Weighted Assets (RWAs) | | 5 | - | 1.0% | | 4 | - | 0.8% | | 3 | State Bank of India | 0.6% | | 2 | - | 0.4% | | 1 | ICICI Bank | 0.2% | Background The Reserve Bank had issued a Framework for D-SIBs on July 22, 2014. The D-SIB Framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs every year in August starting 2015. The Framework also requires D-SIBs to be placed in four buckets depending upon their Systemic Importance Scores (SISs). Based on the bucket in which a D-SIB is placed, additional common equity requirement has to be applied to it. Further, as mentioned in the D-SIB Framework, if a foreign bank has 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. Based on the methodology provided in the D-SIB Framework and data collected from banks as on March 31, 2015, the Reserve Bank had announced State Bank of India and ICICI Bank Ltd. as D-SIBs on August 31, 2015. Based on the Domestic Systemically Important Banks (D-SIBs) Framework and data collected from banks as on March 31, 2016, these two banks have again been declared D-SIBs in 2016. Alpana Killawala
Principal Adviser Press Release : 2016-2017/495 | |