The Reserve Bank of India (RBI) will soon issue Expected Credit Loss (ECL) norms for banks and all-India financial institutions to align Indian banks’ provisioning norms with global standards.

“With a view to strengthening the resilience of the banking sector, it is proposed to issue the draft Reserve Bank (Asset Classification, Provisioning and Income Recognition) Directions, 2025, for Scheduled Commercial Banks (excluding Small Finance Banks, Payments Banks, and Regional Rural Banks) and All-India Financial Institutions,” the RBI stated.

The draft directions propose replacing the current incurred loss framework with an Expected Credit Loss (ECL) approach, subject to a prudential floor, while retaining the existing asset classification norms.

The guidelines are expected to enhance bank

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