Banks set aside ₹20,000cr for RBI's new loan loss rules
India's public sector banks are setting aside ₹20,000 crore to get ready for the Reserve Bank of India's (RBI) new expected credit loss (ECL) framework, which kicks in from April 1, 2027.
This new system will have banks look ahead and estimate possible future loan losses instead of just reacting after things go wrong—basically, it's about spotting trouble before it happens.
The ECL model sorts loans into three risk buckets, each with its own rule for how much money banks need to keep aside.
Major lenders are already preparing for this transition
Big names like Punjab National Bank expect a ₹9,000 crore hit from higher-risk loans.
Indian Overseas Bank is prepping for around ₹2,800 crore over four years, while UCO Bank has already set aside an extra ₹1,000 crore above what's required.
Private players like ICICI and HDFC are also building their buffers.
This move is a huge shift toward making India's banking system more transparent and stable—it means your bank is planning ahead so surprises don't hit as hard down the line.