MUMBAI: Reserve Bank of India (RBI) has included private sector lender, HDFC Bank Ltd as domestic-systemically important bank (D-SIB).
With this, the bank has joined State Bank of India (SBI) and ICICI Bank Ltd, which have been tagged as D-SIBs, or ”too-big-to-fail” for the third consecutive year.
The RBI has adopted a system by which banks are plotted into four buckets based on a lender’s systemic importance scores in ascending order.
The banking regulator prescribes higher capital requirements -in terms of additional Common Equity Tier 1 (CET 1) capital -for such entities. ”The additional Common Equity Tier 1 (CET1) requirement for D-SIBs has already been phased-in from April 1, 2016 and will become fully effective from April 1, 2019- D-SIB surcharge for HDFC Bank will be applicable from April 1, 2018, an RBI said.
RBI started listing D-SIBs from August 2015. SBI and ICICI Bank were identified as D-SIB both in 2015 and 2016 respectively. (AGENCIES)
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