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Government bank stocks down by 3% today: What's the reason?
28 Apr 2026

Public sector bank stocks witnessed a major fall today, with Bank of India and Bank of Baroda leading the decline at 3% each.

Canara Bank's shares fell by 2%, while State Bank of India (SBI), India's largest lender, saw a dip of 1%.

The sharp decline comes after the Reserve Bank of India (RBI) announced its decision to implement the Expected Credit Loss (ECL) framework from April 1, 2027.

What is RBI's ECL framework?
Regulatory shift

The RBI's ECL framework is a major shift in the way banks provision for potential loan losses.

It replaces the current incurred-loss provisioning model with a forward-looking approach.

This means banks will now have to build buffers based on anticipated credit losses, instead of only when a loss has actually occurred.

The central bank said this overhaul aims to strengthen resilience, transparency, and consistency across the banking sector.

Financial impact on PSU banks
Financial implications

The financial impact of the RBI's decision could be significant for PSU banks.

According to Macquarie, these lenders could see a one-time hit to their net worth between 5% and 10%.

The brokerage also warned that credit costs across PSU lenders could go up by 20-25 basis points.

However, Moody's analysts expect a more contained impact with the new regulations lowering tangible common equity for banks by 50-80bps.

NPA classification rule remains unchanged
Continuity assurance

Despite the major changes in provisioning architecture, the RBI has decided to keep the current 90-day overdue rule for classifying non-performing assets (NPAs).

This move is aimed at providing lenders some continuity amid the sweeping changes.

The transition to these new norms is likely to impact banks' capital adequacy ratios and might spark discussions on dividend policy, capital planning, and loan book composition as they head into 2027.