The Reserve Bank of India (RBI) declared state-owned SBI, as well as private-sector lenders ICICI Bank and HDFC Bank, to be Domestic Systemically Important Banks (D-SIBs), or institutions “too large to fail,” on Tuesday. Domestic Systematically Important banks are those banks that, if failed, would have a significant impact on the economy. SIBs are seen as “too large to fail,” implying that the government will aid them in times of financial hardship. These banks also have a leg up on the competition in the funding markets.
Since September 4, 2017, these three banks have remained on the RBI’s D-SIBs list. The D-SIB banks are divided into five categories: Bucket 1, Bucket 2, Bucket 3, Bucket 4, and Bucket 5. Bucket 5 is the most significant, followed by the others in order of importance. The State Bank of India occupies Bucket 3, whereas ICICI Bank and HDFC Bank occupy Bucket 1. The list has been updated based on information gathered from banks as of March 31, 2021.