RBI to Hold Talks With Lenders on Nov 12 Over Credit Loss Provision Rules

what happened

India's central bank has scheduled talks with lenders and other industry participants for November 12 about its proposed expected credit loss provisioning rules, TradingView reports. Lenders are asking for a revision of provisioning percentages and more room to shift to the new regime.

Banks are floating the idea of spreading the extra provisions over several years rather than booking the full hit at once. According to a person familiar with the matter, the aim is to agree on the methodology and make the transition smoother. The final directions were issued on April 27, 2026, and from April 1, 2027 banks will move from an incurred-loss model to a forward-looking one.

A four-year transitional arrangement is in place to protect regulatory capital, with the permitted add-back to CET1 falling from 80 percent in FY28 to 20 percent in FY31. The existing 90-day rule for classifying non-performing loans has been kept.

why it matters

For markets, the key question is how the change will hit capital and earnings at Indian banks, since the more provisions must be booked at once, the greater the pressure on financial results. The final terms are not settled yet, so the outcome of the November 12 meeting matters to investors in India's banking sector.

market impact

Indian banks: the outcome of talks on provisioning timing will shape sector capital and profits

tags

instruments