Skip to main content

Systematically Important Banks (SIBs)

Some banks are identified as systematically important and are subjected to higher capital requirements. When are banks termed as systematically important? What are the additional capital requirements for such banks? And which are the systematically important banks in India?

What are Systematically Important Banks (SIBs)?

Systematically Important Banks (SIBs) are perceived as banks that are ‘Too Big To Fail (TBTF)’. 

Why additional policy measures are required for SIBs?

The perception of TBTF creates an expectation of government support for these banks at the time of distress. Due to this perception, these banks enjoy certain advantages in the funding markets. However, the perceived expectation of government support amplifies risk-taking, reduces market discipline, creates competitive distortions, and increases the probability of distress in the future. These considerations require that SIBs should be subjected to additional policy measures to deal with the systemic risks and moral hazard issues posed by them.

When was SIB framework introduced?

Basel Committee on Banking Supervision (BCBS) came out with a framework in November 2011 (since up-dated in July 2013) for identifying the Global Systemically Important Banks (G-SIBs) and the magnitude of additional loss absorbency capital requirements applicable to these G-SIBs.

The framework was extended to Domestic Systemically Important Banks (D-SIBs) in October 2012.

BCBS methodology for identification of G-SIB vs RBI methodology for identification of D-SIB 

 

BCBS G-SIB identification methodologyRBI D-SIB identification methodology
Sample of banks75 largest global banks based on financial year end Basel III leverage ratio exposure measure. National supervisors have the discretion to add any bank in the sample apart from 75 largest banks.Banks having size (Basel III leverage ratio exposure measure) as a percentage of GDP equal to or more than 2%. Additionally, 5 largest foreign banks, based on their size, are also be added in the sample.
IndicatorsFive broad indicators –
1. Cross jurisdictional activity
2. Size
3. Interconnectedness
4. Substitutability
5. Complexity		Four broad indicators as mentioned in BCBS’s framework for D-SIBs are used –
1. Size
2. Interconnectedness
3. Substitutability
4. Complexity
Indicator weightsAll indicators given equal weight (20%) with a cap to substitutability category weight.Size given a weight of 40% and other three indicators given a weight of 20% each.
Sub-indicatorsThree sub-indicators for Complexity indicator –
1. Notional amount of OTC derivatives
2. Level 3 assets and
3. Trading and Available For Sales Securities		Level 3 assets for complexity indicator dropped and instead cross jurisdictional liabilities added.
Designating banks as SIBsBased on a range of indicators, a composite score of systemic importance for each bank in the sample is computed. The banks having systemic importance above a threshold are designated as G-SIBs.Based on a range of indicators, a composite score of systemic importance for each bank in the sample is computed. The banks having systemic importance above a threshold are designated as D-SIBs.

How are SIBs segregated?

  • SIBs are segregated into different buckets based on their systemic importance scores, and subject to loss absorbency capital surcharge in a graded manner depending on the buckets, in which they are placed. 
  • SIB in lower bucket attract lower capital charge and a SIB in higher bucket attract higher capital charge.

What is bucket-wise additional capital requirements for SIBs?

BucketAdditional CET1 requirement (as a percentage of risk weighted assets)

 

D-SIBG-SIB
5 (Empty)1.00%3.5%
40.80%2.5%
30.60%2%
20.40%1.5%
10.20%1%

  • The additional CET1 (Common Equity Tier 1) requirement is in addition to the capital conservation buffer.
  • The 5th bucket is kept empty, to take care of banks in case their systemic importance score increases in future beyond the 4th bucket. 
  • In the event of the 5th bucket getting populated, an additional empty (6th) bucket would be added.
  • An empty bucket with higher CET1 requirement incentivizes SIBs with higher scores not to increase their systemic importance in future.

When was D-SIBs framework implemented in India?

  • RBI had issued the framework for dealing with D-SIBs on July 22, 2014. 
  • As required under D-SIB framework, RBI has been disclosing the names of banks designated as D-SIBs starting from 2015. 
  • The additional Common Equity Tier 1 (CET1) requirement for D-SIBs was phased-in from April 01, 2016 and became fully effective from April 01, 2019. 
  • The D-SIBs framework was reviewed and revised on December 28, 2023.

What were the major revisions in the D-SIBs framework?

Based on the review of D-SIBs framework in December 2023, while there was no change in the selected indicators or their respective weights, some of the revisions to the methodology were as follows –

  • The data requirement under ‘Payments’ sub-indicator of ‘Substitutability’ indicator was revised from “Payments made in Indian Rupee (INR) using Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems” to –
    • Total value of Digital Payments made in INR (75% weightage)
    • Total volume of Digital Payments made in INR (25% weightage)
  • The computation of systemic importance scores, based on the end-March data of all the banks in the sample, would be performed annually in the months of August-October, and names of the banks classified as D-SIBs would be disclosed in the month of November every year. Accordingly, banks would be required to be in readiness to submit the required data to RBI by August 15 of each year.

Which are D-SIBs in India?

(Updated on December 02, 2025)

RBI has released the 2025 list of Domestic Systemically Important Banks (D-SIBs) based on the data collected from banks as on March 31, 2025. The list is as follows –

Bucket Banks Additional Common Equity Tier 1 requirement as a percentage of Risk Weighted Assets (RWAs)
5 - 1%
4 State Bank of India (SBI) 0.80%
3 - 0.60%
2 HDFC Bank 0.40%
1 ICICI Bank 0.20%

RBI had announced SBI and ICICI Bank as D-SIBs in 2015 and 2016 while HDFC Bank was classified as D-SIB in 2017.


References

Reserve Bank of India. (2014, July 22). 'Framework for Dealing with Domestic Systemically Important Banks (D-SIBs)'. Retrieved from https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2861

Reserve Bank of India. (2014, July 22). 'RBI releases Framework for dealing with Domestic Systemically Important Banks (D-SIBs)'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=31680

Reserve Bank of India. (2023, December 28). 'Domestic Systemically Important Bank (D-SIB) Framework - Review of the Assessment Methodology'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57015

Reserve Bank of India. (2023, December 28). 'Framework for Dealing with Domestic Systemically Important Banks (D-SIBs) - 2023'. Retrieved from https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=4362#F1

Reserve Bank of India. (2023, January 02). 'RBI releases 2022 list of Domestic Systemically Important Banks (D-SIBs)'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54979

Reserve Bank of India. (2023, December 28). 'RBI releases 2023 list of Domestic Systemically Important Banks (D-SIBs)'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57006

Reserve Bank of India. (2024, November 13). 'RBI releases 2024 list of Domestic Systemically Important Banks (D-SIBs)'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59088

Reserve Bank of India. (2025, December 02). 'RBI releases 2025 list of Domestic Systemically Important Banks (D-SIBs)'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61729


Follow at - Telegram   Instagram   LinkedIn   X   Facebook

Labels:

Comments

Post a Comment

Popular Posts

Regulatory Measures for the Foreign Exchange Market

Reserve Bank of India (RBI) has announced regulatory measures for the foreign exchange market. Cancellation and rebooking / rollovers of foreign exchange derivative contracts An Authorised Dealer shall not permit users to rebook any foreign exchange derivative contract involving the INR, whether deliverable or non-deliverable, which has been cancelled with any of the Authorised Dealers. An Authorised Dealer may, however, continue to permit users to rollover foreign exchange derivative contracts on maturity, subject to compliance with the extant directions. Threshold limit for taking positions without requirement to establish the existence of underlying Authorised Dealers were permitted to allow users to take positions upto USD 100 million equivalent of notional value (outstanding at any point of time), across all Authorised Dealers, for hedging contracted exposure without the requirement to establish the existence of underlying exposure.  Further, a user was allowed to take positio...
Post a Comment
Read more

Credit Facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs)

Reserve Bank of India (RBI) has issued guidelines on credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs). What are the guidelines on credit facilities to SCs & STs? District Level Consultative Committees formed under the Lead Bank Scheme should continue to be the principal mechanism of co-ordination between banks and development agencies.  National Scheduled Tribes Finance & Development Corporation and National Scheduled Castes Finance & Development Corporation have been set up under the administrative control of Ministry of Tribal Affairs and Ministry of Social Justice & Empowerment, respectively. Banks should advise their branches / controlling offices to render all the necessary institutional support to enable these institutions to achieve the desired objectives. Loans sanctioned to State Sponsored Organisations for Scheduled Castes / Scheduled Tribes for the specific purpose of purchase and supply of inputs and / or the marketing of the out...
Post a Comment
Read more

Highlights of RBI Annual Report 2025-26 – Chapter 1 to 3

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the first article in the series.  Legal framework for publication of Annual Report by the RBI Report of the Central Board of Directors on the working of RBI for the year is submitted to the Central Government in terms of Section 53(2) of the RBI Act, 1934. The letter of transmittal is signed by the RBI Governor and addressed to the Finance Secretary, Ministry of Finance, Government of India. Documents submitted by the RBI to the Central Government In pursuance of Section 53(2) of the RBI Act, 1934, the following documents have been submitted to the Central Government – A copy of the Annual Accounts for the year ended March 31, 2026 certified by the RBI’s Auditors and signed by Chief General Manager-in-charge, all the Deputy Governors and Governor. 2 copies of the Annual Report of the Central Board on the workin...
Post a Comment
Read more

Framework for Self-Regulatory Organisations in the FinTech Sector (Updated on September 10, 2026)

Reserve Bank of India (RBI) has released the framework for self-regulatory organisations in the FinTech sector. What are FinTechs? For the purpose of membership of an Self-Regulatory Organisations for FinTech Sector (SRO-FT), FinTechs may be defined as entities that provide technological solutions for delivery of financial products and services to businesses and consumers or encompass regulatory and supervisory compliance in partnership with traditional financial institutions or otherwise.  What is the need of Self-Regulatory Organisations for FinTech Sector? FinTechs play a pivotal role in redefining financial services by saving time, enhancing access, and lowering costs. While the FinTechs bring various innovations, the FinTech sector also raises concerns relating to customer protection, data privacy, cyber security, grievance handling, internal governance, financial system integrity, etc. A judicious balance between maximising the creative potential of FinTechs, while minimising...
Post a Comment
Read more

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) (Updated as on September 11, 2026)

Reserve Bank of India (RBI) has issued the directions on maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) by banks. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Payments Banks (PBs) Local Area Banks (LABs) Regional Rural Banks (RRBs) Primary (Urban) Co-operative Banks (UCBs) Rural Co-operative Banks – State Co-operative Banks (StCBs) District Central Co-operative Banks (DCCBs) What is CRR? Every bank shall maintain in India by way of cash reserve, a sum equivalent to such percent of its Net Demand and Time Liabilities (NDTL) in India, as the RBI in terms of Section 42(1) of the RBI Act, 1934 (for scheduled banks) and Section 18(1) of the Banking Regulation Act (BR Act), 1949 (for non-scheduled banks) [including provisions of Section 18(1) of the BR Act as applicable to co-operative banks], may specify. What is incremental CRR? In terms of Secti...
Post a Comment
Read more