RBI made a significant ruling on SBI and HDFC Bank; both banks' regulations would alter as a result; Recognize specifics

 RBI made a significant ruling on SBI and HDFC Bank; both banks' regulations would alter as a result; Recognize specifics

RBI made a significant ruling on SBI and HDFC Bank; both banks' regulations would alter as a result; Recognize specifics

The increased extra capital requirement for SBI is now 80 bps instead of 60 bps. HDFC Bank's extra capital requirement has also raised, going from 20 to 40 basis points at the same time.

SBI and HDFC Bank have been moved to the top of the list of Domestic Systemically Important Banks (D-SIBs) by the Central Reserve Bank (RBI). and Bucket 4 now contains SBI instead of Bucket 3. HDFC Bank was moved from Bucket 1 to Bucket 2 concurrently. Both banks will need to maintain higher levels of Tier 1 capital as a result of the bucket shifting upward. By April 1, 2025, these banks will need to retain capital above Tier 1.

Following this modification, SBI's supplementary capital requirement was raised from 60 bps to 80 bps. HDFC Bank's extra capital requirement has also raised, going from 20 to 40 basis points at the same time.

An effect of one bank's troubles on another bank was acknowledged by the RBI in its most recent Financial Stability Report. The RBI said in the study that the failure of any major bank would have an effect on Tier 1 capital of 3.6%. 2.2% was the earlier estimate for the effect. By September 2024, it is anticipated that all commercial banks' NPAs would have decreased from 3.2% to 3.1%. Up till September, the CRAR is predicted to be 14.8%. An estimated 12.2% of cases include stress. The expected GNPA is 4.4% even under the stress scenario.