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The RBI is reviewing its expected credit loss framework after rating agencies recorded default rates above benchmark thresholds. A stricter application could raise risk weights for SME loans, pushing up borrowing costs for small and mid-sized businesses.
The RBI's Fifth Amendment Directions, 2026 now allow banks to count current-year profits in their CRAR capital ratio on a quarterly basis, subject to a prescribed formula. This could reduce pressure on lenders to raise fresh equity and may support faster loan book growth.
Bank stocks fell after analysts warned the RBI's shift to an Expected Credit Loss provisioning framework from April 2027 will raise provisioning requirements and squeeze margins, with PSU banks seen as most at risk. The change aligns India with global standards but pressures near-term earnings.
The RBI now requires banks to classify all loans of a borrower as NPA if any single loan goes bad, ending the practice of treating each loan in isolation. This will likely lift reported bad loan levels and force banks to set aside more capital. Lenders with large retail or MSME portfolios face the biggest immediate
Tag
The RBI is reviewing its expected credit loss framework after rating agencies recorded default rates above benchmark thresholds. A stricter application could raise risk weights for SME loans, pushing up borrowing costs for small and mid-sized businesses.
28d ago · 3 min · Policy & Government
The RBI's Fifth Amendment Directions, 2026 now allow banks to count current-year profits in their CRAR capital ratio on a quarterly basis, subject to a prescribed formula. This could reduce pressure on lenders to raise fresh equity and may support faster loan book growth.
1mo ago · 2 min · Policy & Government
Bank stocks fell after analysts warned the RBI's shift to an Expected Credit Loss provisioning framework from April 2027 will raise provisioning requirements and squeeze margins, with PSU banks seen as most at risk. The change aligns India with global standards but pressures near-term earnings.
2mo ago · 2 min · Markets
The RBI now requires banks to classify all loans of a borrower as NPA if any single loan goes bad, ending the practice of treating each loan in isolation. This will likely lift reported bad loan levels and force banks to set aside more capital. Lenders with large retail or MSME portfolios face the biggest immediate
2mo ago · 1 min · Policy & Government
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