The Reserve Bank of India (RBI) has identified State Bank of India (SBI), HDFC Bank, and ICICI Bank as the country’s most systemically important financial institutions, designating them as Domestic Systemically Important Banks (D-SIBs). This announcement, made on Tuesday, confirmed that these three institutions hold a critical position within the banking sector.

These banks, which were also recognised as D-SIBs in 2024, have once again been placed at the forefront of the country’s financial landscape due to their sheer size and importance to the domestic economy. D-SIBs are deemed so vital that their failure would have a significant adverse impact on the country’s financial system, potentially causing widespread disruption. As such, the government and regulators are committed to ensuring their stability, with measures in place to prevent them from failing.

“State Bank of India, HDFC Bank, and ICICI Bank continue to be identified as Domestic Systemically Important Banks (D-SIBs) under the same bucketing structure as in the 2024 list of D-SIBs. The additional Common Equity Tier 1 (CET1) requirement for these D-SIBs will be in addition to the Capital Conservation Buffer," the Reserve Bank of India (RBI) said in a statement on December 2, 2025.In line with the RBI guidelines, these banks are required to hold a higher level of capital, specifically an additional Common Equity Tier 1 (CET1) capital, which is essential for absorbing losses and managing risks effectively. The level of additional CET1 capital varies depending on the bank’s classification within the D-SIB framework.

The concept of Domestic Systemically Important Banks was first introduced by the RBI in 2014 as part of a global effort to strengthen financial stability. The RBI began identifying these crucial institutions in 2015, with State Bank of India being the first to be added to the list. ICICI Bank followed in 2016, and HDFC Bank was included in 2017. The D-SIB classification is designed to ensure that these banks maintain sufficient capital to manage financial shocks, with stricter regulatory requirements imposed on them.

Banks’ CET1 Requirements and Buckets

As of this year’s designation, the three D-SIBs have been placed in different ‘buckets’ based on their size and systemic importance:

State Bank of India has been placed in Bucket 4, which requires it to maintain an additional 0.80% CET1 capital.

HDFC Bank remains in Bucket 2, with an additional 0.40% CET1 capital requirement.

ICICI Bank is in Bucket 1, requiring an additional 0.20% CET1 capital.

These higher CET1 requirements are designed to ensure that these banks can weather financial stresses without threatening the overall stability of the economy. The new capital requirements, Basel III capital adequacy norms, will come into effect on April 1, 2027.

The D-SIB framework underscores the significance of these institutions in the financial ecosystem. They are considered so integral to the functioning of the country’s economy that any disruption could lead to a ripple effect, making their preservation a priority for policymakers. In the unlikely event of a crisis, the government would likely intervene to prevent their collapse and safeguard the broader financial system.