Key Points
The Reserve Bank of India has formed a working group to suggest a framework for a smoother transition to the proposed expected credit loss-based provisioning system...
The group is expected to give inputs on some of the technical aspects of the transition to a new regime...
The ECL approach to provisioning would be a paradigm shift from the current incurred loss-based provisioning regime, RBI said.. There were however apprehensions over the likely dent in banks' reported profits under the proposed regime...
"However, the healthy operating buffers, low incremental credit costs, high provision coverage ratio and the possibility of defraying of additional provisioning requirements over a few years provide comfort," the rating company said.. Earlier in January, the central bank had released a discussion paper on the proposal inviting inputs from all stakeholders...
The RBI envisages a principle-based framework for provisioning for credit risk, which has already been implemented under International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB).. ends. Page 2 of 6. (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)..
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