New Delhi, April 28 -- The Reserve Bank of India (RBI) is set to implement an expected credit loss (ECL)-based provisioning framework for banks from April 2027, marking a shift from the current incurred loss approach to a more forward-looking system of recognising credit risk.
The proposed framework aims to strengthen the resilience of the banking sector by requiring lenders to make provisions based on expected future losses rather than waiting for defaults to occur, reported Business Standard.
This transition is expected to align Indias banking regulations with global best practices in risk management.
Improved Transparency, Higher Initial Provisioning
Under the ECL framework, banks will need to assess credit risk at an earlier st...