Indian banks will move to Expected Credit Loss ECL norms starting April 1, 2027, shifting provisioning from only past defaults to losses expected over time. Dinesh Kumar Khara says banks are already prepared and the impact is manageable. The change is expected to strengthen the system’s resilience against future economic stress by improving how credit risk is recognized.
The RBI plans to overhaul expected credit loss provisioning by introducing a staging framework for classifying assets under the ECL approach, moving away from the current incurred-loss based model. The central bank also clarified it will keep the existing 90 day overdue threshold for identifying non-performing assets, easing fears of a full rewrite of NPA rules.
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