SBI, ICICI Bank hail D-SIBs tag, say have higher capital base.
Mumbai: Welcoming Reserve Bank decision to declare them as systemically important banks, state-owned SBI and private sector ICICI Bank Monday said their capital adequacy is much higher than required.
"SBI currently has a much higher level of Tier I at 9.62 percent as opposed to 7 percent required under the current guidelines," SBI Chairperson Arundhati Bhattacharya said in a statement.
ICICI Bank Managing Director and Chief Executive Chanda Kochhar said, "The bank's capital adequacy is well in excess of regulatory requirements and the bank is not expected to require fresh equity capital for the next couple of years."
Both the banks said they were expecting to be declared as D-SIBs (Domestic Systemically Important Banks) due to their size and significant presence across the financial sector.
RBI said D-SIBs will be subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system.
As per the framework for dealing with D-SIBs, the regulator will determine a cut-off score beyond which banks will be put under this category.
These banks will be plotted into four different buckets and will be required to have additional common equity tier 1 (CET1) capital requirement ranging from 0.2 percent to 0.8 percent of risk weighted assets, depending upon the bucket they are plotted into.
Additional CET1 requirement as a percentage of risk weighted assets (RWAs) for SBI, India's biggest lender, is 0.6 percent and that of ICICI Bank, the country's No. 1 private bank, is 0.2 percent, RBI said.
The additional CET1 requirements will be applicable from April 1, 2016, in a phased manner and would become fully effective from April 1, 2019.
In the D-SIB framework, in case a foreign bank having branch presence in India is a global systemically important bank (G-SIB), it has to maintain additional CET1 capital surcharge here as applicable to it as a G-SIB, proportionate to its risk weighted assets in the country.
The concept of SIBs came into play after the 2008 global credit crisis which triggered the collapse of many Wall Street banks, including Lehman Brothers. A slew of these global banks were bailed out by their respective governments.
Mumbai: Welcoming Reserve Bank decision to declare them as systemically important banks, state-owned SBI and private sector ICICI Bank Monday said their capital adequacy is much higher than required.
"SBI currently has a much higher level of Tier I at 9.62 percent as opposed to 7 percent required under the current guidelines," SBI Chairperson Arundhati Bhattacharya said in a statement.
ICICI Bank Managing Director and Chief Executive Chanda Kochhar said, "The bank's capital adequacy is well in excess of regulatory requirements and the bank is not expected to require fresh equity capital for the next couple of years."
Both the banks said they were expecting to be declared as D-SIBs (Domestic Systemically Important Banks) due to their size and significant presence across the financial sector.
RBI said D-SIBs will be subjected to differentiated supervisory requirements and higher intensity of supervision based on the risks they pose to the financial system.
As per the framework for dealing with D-SIBs, the regulator will determine a cut-off score beyond which banks will be put under this category.
These banks will be plotted into four different buckets and will be required to have additional common equity tier 1 (CET1) capital requirement ranging from 0.2 percent to 0.8 percent of risk weighted assets, depending upon the bucket they are plotted into.
Additional CET1 requirement as a percentage of risk weighted assets (RWAs) for SBI, India's biggest lender, is 0.6 percent and that of ICICI Bank, the country's No. 1 private bank, is 0.2 percent, RBI said.
The additional CET1 requirements will be applicable from April 1, 2016, in a phased manner and would become fully effective from April 1, 2019.
In the D-SIB framework, in case a foreign bank having branch presence in India is a global systemically important bank (G-SIB), it has to maintain additional CET1 capital surcharge here as applicable to it as a G-SIB, proportionate to its risk weighted assets in the country.
The concept of SIBs came into play after the 2008 global credit crisis which triggered the collapse of many Wall Street banks, including Lehman Brothers. A slew of these global banks were bailed out by their respective governments.
