Reserve Bank of India mandates ECL provisioning from April 2027
Big update from the Reserve Bank of India: Starting April 2027, banks will have to follow a new system called "expected credit loss" (ECL) for handling bad loans.
While still following the 90-day NPA rule, banks now need to predict which loans might turn sour and set aside extra funds in advance.
This could affect how much profit banks make, but it's all about being better prepared.
Indian rules align with global accounting
With this move, India's banking rules are catching up with global standards: think the International Accounting Standards Board and the US Financial Accounting Standards Board.
The idea is to spot risks early rather than just reacting after things go wrong.
As Rajosik Banerjee from KPMG India put it, these rules mean stricter checks on who gets a loan and bigger safety nets for banks, making the whole system more stable even when global markets get shaky.