Module: | MODULE B: RISK MANAGEMENT
Q328: Scenario: A retail investor observes that alongside SBI, the RBI has also designated ICICI Bank and HDFC Bank as Domestic Systemically Important Banks (D-SIBs) in its latest December 2025 review. Consider the following statements regarding the capital treatment of these two private sector lenders:
1. Both HDFC Bank and ICICI Bank are placed in the exact same D-SIB bucket, requiring an identical CET1 surcharge.
2. HDFC Bank is positioned in Bucket 2, mandating an additional CET1 capital surcharge of 0.40 percent.
3. ICICI Bank is positioned in Bucket 1, mandating an additional CET1 capital surcharge of 0.20 percent.
Which of the statements given above is/are correct?
2. HDFC Bank is positioned in Bucket 2, mandating an additional CET1 capital surcharge of 0.40 percent.
3. ICICI Bank is positioned in Bucket 1, mandating an additional CET1 capital surcharge of 0.20 percent.
Which of the statements given above is/are correct?
✅ Correct Answer: B
The correct answer is B. Statement 1 is incorrect: The RBI classifies D-SIBs into different buckets based on their systemic importance score (size, interconnectedness, lack of readily available substitutes, and complexity). HDFC Bank and ICICI Bank do not share the same bucket and thus face different capital surcharges.
Statement 2 is correct: As per the RBI's updated D-SIB list on December 2, 2025, HDFC Bank was retained in Bucket 2. Consequently, it is legally mandated to maintain an additional Common Equity Tier 1 (CET1) surcharge of 0.40% over and above the standard baseline.
Statement 3 is correct: In the exact same December 2025 notification, ICICI Bank was retained in Bucket 1, which corresponds to an additional CET1 surcharge of 0.20%. (For context, SBI is the only bank in Bucket 4, requiring 0.80%).
Statement 2 is correct: As per the RBI's updated D-SIB list on December 2, 2025, HDFC Bank was retained in Bucket 2. Consequently, it is legally mandated to maintain an additional Common Equity Tier 1 (CET1) surcharge of 0.40% over and above the standard baseline.
Statement 3 is correct: In the exact same December 2025 notification, ICICI Bank was retained in Bucket 1, which corresponds to an additional CET1 surcharge of 0.20%. (For context, SBI is the only bank in Bucket 4, requiring 0.80%).