Fitch Ratings says Indian banks are well placed to shift to the expected credit loss provisioning framework that begins April 1, 2027. Fitch expects sufficient capitalisation, though common equity tier 1 may dip slightly. Banks can use a four-year transition period as initial provisions run higher than forecast, which Fitch links to a positive outlook.
The Reserve Bank of India will introduce the Expected Credit Loss (ECL) provisioning framework starting April 1, 2025, requiring banks to move from loss based provisioning to a more proactive approach. RBI has outlined transition measures to support implementation and has clarified that Non-Performing Asset classification will remain unchanged, even as banks adjust credit cost recognition.
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