The indicators used to identify a bank as D-SIB are: size, interconnectedness, fungibility (including total value and volume of payments in rupees) and complexity | Photo credit:
The banks designated by D-SIB must maintain additional common equity tier 1 (CET1), in addition to the capital maintenance buffer.
The additional CET 1 requirement for the above-mentioned bank remains at last year’s level. SBI has prescribed an additional CET 1 requirement of 0.80 percent as a percentage of its risk-weighted assets (RWAs); HDFC Bank (0.40 percent) and ICICI Bank (0.20 percent).
Within the CRAR (capital to risk-weighted assets ratio) of 11.5 percent for banks, the CET-1 is 5.5 percent. So, if SBI wants to extend a loan, it will have to back it with 12.3 percent of the loan amount as capital, as per D-SIB regulations.
If HDFC Bank and ICICI Bank want to extend a loan, they will have to back it with 11.9 percent and 11.7 percent of the loan amount respectively as capital.
The indicators used to identify a bank as D-SIB are: size, interconnectedness, fungibility (including the total value and volume of payments in rupees) and complexity.
In December 2023 Framework for dealing with D-SIBsthe RBI underlined that D-SIBs are viewed as too-big-to-fail (TBTF) banks. This perception of TBTF creates an expectation of government support for these banks in times of need. Due to this perception, these banks enjoy certain advantages in the financing markets.
However, the perceived expectation of government support increases risk-taking, reduces market discipline, creates competitive distortions, and increases the likelihood of problems in the future.
“These considerations require that SIBs be subject to additional policy measures to address the systemic and moral hazard risks they pose,” the RBI said.
Published on December 2, 2025
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