“We have received comments from stakeholders which are being evaluated. Some more work is to be done. At this point of time it will not be correct to infer that (June) 30th will be the date when it will be launched,” deputy governor M Rajeshwar Rao, who is in charge of regulations said.
In January, the RBI had released a discussion paper on ECL based approach for provisioning. Under the new norms banks have to classify financial assets, like loans, loan sanctions, guarantees and investments into – Stage 1, Stage 2, and Stage 3 category, depending upon the assessed credit losses on them.
In a report last month, credit rating agency ICRA said banks, particularly those operating with thinner capital cushions and with higher overdue books, are likely to see more transitioning pain and would need to raise capital, due to the new norms. “With almost two years to possibly transition to the ECL approach, such banks should enhance their capital position and take corrective actions to reduce their overdue exposures to smoothly transition to ECL-based provisions,” ICRA said.
Governor Shaktikanta Das said the RBI will give banks enough time for compliance. “There is no need for any panic. We are mindful of the fact that banks will need some time to implement. We have assessed the impact and it is quite manageable limits according to our assessment,” Das said.
In its annual report for fiscal 2023 released in late May, RBI had said that the ECL based provisioning will be introduced in during 2023-24 as part of its measures to strengthen the bad loan resolution ecosystem.