RBI -Governor Sanjay Malhotra
The Reserve Bank of India (RBI) will soon issue the expected standards of the expected credit loss (ECL) for banks and financial institutions for All-India to draw up the facilities of Indian banks with worldwide standards.
“With a view to strengthening the resilience of the banking sector, it is proposed to issue the directions of the draft tress reserve (asset classification, facilities and income reconciliation), 2025, for planned commercial banks, payment banks and regional national institutions,” the RBINS “.
The draft manuals propose the replacement of the current loss framework with an expected credit loss (ECL) approach, subject to a prudential floor, while retaining the existing asset massing standards.
The guidelines are expected to improve the credit risk management practices of banks and promote better comparability of reported financial data at institutions. The framework is designed for implementation in a non-disturbed way with a suitable sliding path.
Anil Gupta, senior VP and co-group head in ICRA ratings, said that ICRA had previously projected a reduction of 300-400 basic point (BPS) in the core capital ratio of banks in the implementation of IND-axis, mainly taking into account the expected effect of credit loss (ECL).
“In contrast to our earlier estimate of implementation from April 1, 2025, the proposed implementation will moderate the impact from 1 April 2027, given the consistent improvement of power quality in recent years. Furthermore, the phased rollout via FY2031 offers banks with greater flexibility,” he said.
Published on October 1, 2025
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