RBI keeps April 2027 ECL deadline and issues transition guidelines
Business
The Reserve Bank of India (RBI) isn't budging on its April 2027 deadline for banks to roll out the new expected credit loss (ECL) model, even though banks wanted more time.
This change means banks will have to spot risky loans earlier, moving from a proactive approach to being more proactive about bad loans.
The RBI has also laid out a transition plan and clear guidelines to help banks adjust.
Private banks adapt, public banks strained
Private banks, which already have stronger financial cushions, are expected to handle the switch more smoothly.
Public sector banks might find it tougher and could face higher costs in the short run.
Still, with these new rules, the RBI is hoping for a smarter and steadier way of managing loan risks across scheduled commercial banks.