New credit loss norm could hurt
For decades Indian banks managed bad loans under the Incurred Loss (IL) approach. Banks provisioned only after borrowers actually defaulted. The Reserve Bank of India is changing the Asset Classification, Provisioning, and Income Recognition norms. From April 1, 2027, banks must shift to the Expected Credit Loss (ECL) framework, from backward-looking IL model. The RBI is asking lenders to anticipate…
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