RBI's New ECL Norms May Hit Indian Banks' Bottom Lines: What Investors Need to Know

Overview

The Reserve Bank of India (RBI) is considering new Expected Credit Loss (ECL) standards for banks' asset portfolios. This shift could lead to higher provisions, particularly for Stage 2 loans, potentially affecting banks' profitability and operating ratios. The banking sector is providing feedback on these proposed norms, especially concerning their impact on priority sector lending like agriculture and MSMEs.