Expected credit loss framework credit positive for Indian banks: Moody's ratings

Chennai, Oct. 15 -- The Reserve Bank of India's (RBI) proposal for the phased implementation of an Expected Credit Loss (ECL) framework is credit positive for Indian banks, according to Moody's Ratings.

The global credit rating agency stated that the move will enhance the resilience of banks through early risk recognition and forward-looking provisions, aligning them with global standards.

On October 7, the RBI proposed regulations for phased adoption of the ECL framework, aligned with the International Financial Reporting Standard (IFRS 9).

The proposed norms require banks to classify financial assets into three stages based on credit risk. Stage 1 assets will be provisioned at 12-month ECL, Stage 2 assets at lifetime ECL for significan...