New Delhi, May 4 -- Indian banks are well-prepared to adopt the Reserve Bank of India's (RBI) new Expected Credit Loss (ECL) provisioning framework, backed by strong capital buffers and improved asset quality, according to a report by CareEdge Ratings.
The RBI has notified the Commercial Banks - Asset Classification, Provisioning and Income Recognition Directions, 2026, which will come into effect from April 1, 2027. The new norms mandate a shift from the traditional incurred loss model to a forward-looking ECL-based framework, aligning Indian banking practices with global standards and Basel III norms.
Under the revised system, banks will be required to assess and provision for potential credit losses based on future risks rather than pa...