The Reserve Bank of India's recent proposals to change credit risk rules and implement the so-called expected credit loss (ECL) framework for lenders are unlikely to significantly impact bank balance sheets, thanks to a generous transition period, said the chairman of India's largest lender on Wednesday.
The central bank's proposals aim to enhance the resilience of the banking sector by aligning India's regulatory framework with global best practices.
"With regard to ECL, technologically we are ready ... more importantly, the long transition time ensures limited impact on balance sheets of the bank," State Bank of India Chairman Challa Sreenivasulu Setty said at an event in Mumbai.
Under the draft ECL framework, banks would be required to classify loans into stages based on credit risk, while continuing to apply existing rules for classifying non-performing assets, or loans that have turned bad.
The RBI has proposed that the new norms come into effect from April 1, 2027, and has invited public comments on the draft guidelines until November 30.
While a draft framework on the rules had been published earlier to bring Indian norms in line with global ones, an implementation date had not been announced.
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The central bank's proposals aim to enhance the resilience of the banking sector by aligning India's regulatory framework with global best practices.
"With regard to ECL, technologically we are ready ... more importantly, the long transition time ensures limited impact on balance sheets of the bank," State Bank of India Chairman Challa Sreenivasulu Setty said at an event in Mumbai.
Under the draft ECL framework, banks would be required to classify loans into stages based on credit risk, while continuing to apply existing rules for classifying non-performing assets, or loans that have turned bad.
The RBI has proposed that the new norms come into effect from April 1, 2027, and has invited public comments on the draft guidelines until November 30.
While a draft framework on the rules had been published earlier to bring Indian norms in line with global ones, an implementation date had not been announced.
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