The Reserve Bank of India (RBI) is scheduled to meet bankers and industry stakeholders on Nov 12 to discuss its Expected Credit Loss (ECL) provisioning framework, amid concerns over the financial impact of the proposed transition, Moneycontrol reported.
Banks are seeking greater flexibility in implementing the new accounting requirements, including a review of provisioning percentages and permission to spread additional provisions over several years.
According to the report, lenders believe recognising the entire provisioning burden upfront could affect profitability and capital adequacy.
The RBI has reportedly indicated its willingness to consider industry feedback before the new norms take effect.
Bankers are expected to discuss provisioning methodology, implementation challenges and possible adjustments to the transition arrangements.
State Bank of India (SBI) Chairman C S Setty said on Nov 3 that the regulator intended to gather feedback from bank chief executive officers regarding their preparedness.
He indicated that a working group was already engaging with the RBI to refine certain aspects of the guidelines.
However, industry representatives remain concerned about implementation readiness.
As per the report, a senior banker said most public and private sector lenders were not fully prepared to adopt the new accounting framework, except some banks with international reporting obligations.
Lenders may therefore request a phased transition if the regulator retains the scheduled implementation date.
The RBI had not responded to emailed queries seeking details of the meeting at the time of publication.
Under the final directions issued on April 27, 2026, banks must shift from the existing incurred-loss provisioning model to a forward-looking ECL approach from April 1, 2027.
The framework divides financial assets into three stages based on credit risk. Stage 1 assets require provisions for expected credit losses over 12 months.
Stage 2 and Stage 3 assets require provisions covering expected losses over their remaining lifetime. Banks must also incorporate forward-looking macroeconomic assumptions while estimating potential losses.
The existing 90-day threshold for classifying loans as non-performing assets will remain unchanged. The upcoming discussions could help determine whether banks receive additional flexibility during the transition.
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