RBI to require banks to provision upfront for risky loans
Business
The Reserve Bank of India (RBI) is shaking up how banks handle risky loans: now, they'll have to set aside money for possible losses up front instead of waiting for things to go wrong.
Crisil Ratings says this move could lower banks' capital ratios by up to 1.2% points, but the impact can be spread out over a year to soften the blow.
Banks adopt 3 stage risk framework
From April 2027, banks will use a new three-stage system to judge loan risks and decide how much money to keep aside.
This might make credit costs jump, especially for riskier loans.
Still, Crisil points out that banks have healthy capital buffers and should handle the switch without losing their stability.