Mumbai: The long transition provided to banks on the new expected credit loss (ECL) provision guidelines will limit the impact on bank balance sheets, State Bank of India ( SBI) chairman CS Setty said Wednesday.
The comments came a day after the Reserve Bank of India ( RBI) issued a draft circular on the ECL framework, which will replace incurred-loss-based provisioning framework that banks use currently.
The central bank has proposed 100% provisions against unsecured loans after one year of these loans being classified as credit impaired, while all other categories of loans will attract 100% provisions after four years of such classification.
In a big relief to banks, the RBI has proposed that the new norms come into effect only from April 1, 2027. Besides, banks will get four years, till March 31, 2031, to make additional provision on their existing books. The central bank has invited public comments on the draft guidelines until November 30 following its announcement in the monetary policy review last week. Setty said SBI is ready technologically, in terms of models and networks to implement the new guidelines.
The comments came a day after the Reserve Bank of India ( RBI) issued a draft circular on the ECL framework, which will replace incurred-loss-based provisioning framework that banks use currently.
The central bank has proposed 100% provisions against unsecured loans after one year of these loans being classified as credit impaired, while all other categories of loans will attract 100% provisions after four years of such classification.
In a big relief to banks, the RBI has proposed that the new norms come into effect only from April 1, 2027. Besides, banks will get four years, till March 31, 2031, to make additional provision on their existing books. The central bank has invited public comments on the draft guidelines until November 30 following its announcement in the monetary policy review last week. Setty said SBI is ready technologically, in terms of models and networks to implement the new guidelines.
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