The Reserve Bank of India has mandated requirement for higher capital buffer for the State Bank of India (SBI) and HDFC Bank. Both the Banks have been upgraded one noth up within their respective buckets in the list of the domestic systemically important banks (D-SIBs). RBI informed that SBI has moved from bucket 3 to bucket 4, and HDFC Bank has gone upwards from bucket 1 to bucket 2.
As per the stingent Risk Management norms applied by the RBI, additional common equity Tier 1 (CET-1) requirement for SBI is mapped at 0.80 per cent as a percentage of Risk Weighted Assets. For HDFC, it would be 0.40 per cent. The higher D-SIB buffer requirements will be effective from April 1, 2025.
The norms require additional common equity Tier 1 (CET1) as a percentage of RWA ranging from 0.2 per cent to 1 per cent according to bucket placement of bank. (CET1) requirement is in addition to the capital conservation buffer.
RBI maintains differentiated supervisory requirements and higher intensity of supervision for the D-SIBs, The Domestic Systemically Important Banks, categorized as such by the Central bank ( RBI) as any difficulty faced by them may pose substantial to the financial system of the nation.
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