RBI Recognizes Three Banks as India's Safest Banks; Check Which Ones and Why

What are D-SIBs?

Domestic Systemically Important Banks (D-SIBs) are financial institutions whose failure could seriously impact the country’s financial system. To guard against this risk, the RBI requires D-SIBs to hold a high level of capital (Common Equity Tier 1 – CET1). This ensures that these banks are better equipped to absorb losses and manage risks effectively.

The concept of D-SIBs was introduced by the RBI in 2014 as part of an effort to enhance global financial stability. SBI became the first D-SIB in 2015, followed by ICICI Bank in 2016 and HDFC Bank in 2017.

Capital requirements for D-SIBs

The classification of D-SIBs places banks into specific “buckets”, based on their size and systemic importance. Each bucket determines the additional CET1 capital requirement for the bank:

State Bank of India (Bucket 4): 0.80% additional CET1 capital requirement.

HDFC Bank (Bucket 2): 0.40% additional CET1 capital requirement.

ICICI Bank (Bucket 1): 0.20% additional CET1 capital requirement.

These capital requirements will come into effect from April 1, 2025, making these banks more resilient to financial pressures, without threatening the stability of the overall economy.

RBI releases 2024 list of Domestic Systemically Important Banks (D-SIBs)

Why are these banks important?

RBI’s D-SIB framework highlights the importance of these banks, which play a central role in the financial ecosystem. These banks are inseparable due to their large scale of operations and deep involvement in the economy. Any failure in these institutions can impact the financial stability of the country, making their safety a priority for the government and regulators.

The government and regulators implement strict measures to ensure the safety of these banks so as to avoid their failure in times of any crisis and protect the overall financial system.

A legacy of stability

Identification of D-SIBs by RBI was initiated in 2015, when SBI was selected as the first D-SIB. Over the years, the D-SIB framework has become one of India’s financial stability priorities, ensuring that these critical institutions remain resilient to face economic challenges.

By re-recognising SBI, HDFC Bank and ICICI Bank as D-SIBs for 2024, RBI has reaffirmed them as India’s safest banks and the backbone of the country’s economy.

However, this does not discredit other banks as not being safe. Readers are advised to discuss with their banks to understand their stability and initiatives being taken for customer protection.