New Delhi, May 9 -- The Reserve Bank of India's proposed Expected Credit Loss (ECL) framework could mark one of the biggest structural shifts for the country's banking sector in recent years, with experts believing the move may separate stronger lenders from weaker ones over time. The framework, scheduled to be implemented from April 2027, will require banks to recognise potential loan losses much earlier instead of waiting for accounts to turn bad.

Analysts believe the transition may initially create pressure on profitability and provisioning for some lenders, particularly PSU banks, but could strengthen transparency, balance sheet quality, and investor confidence in the long run.

"The RBI's new ECL framework is likely to bring major c...