Setty: ECL transition time will ensure limited impact

The glide path given by the Reserve Bank of India (RBI) to spread higher provisioning requirements while transitioning to the expected credit loss (ECL) from the current incurred loss framework will ensure a limited impact on banks’ balance sheets, said CS Setty, chairman of the State Bank of India (SBI).

- SUBRATA PANDA

He added that SBI is ready in terms of modelling for implementing ECL, but may need to make some tweaks based on the final guidelines issued by the central bank.

“We are technologically ready for ECL in terms of models, but some adjustments may be required based on the final guidelines,” Setty said on the sidelines of the Global Fintech Fest. “The long transition time that is given, we believe that there will be limited impact on the balance sheet of banks,” he added.

RBlis yet to announce draft ECL norms. A discussion paper was floated in early 2023.