Analysts say top pvt banks, PSBs well positioned for ECL norm transition

Large private-sector banks like HDFC Bank, ICICI Bank, Axis Bank, and public-sector banks are well positioned to absorb the additional provisioning requirement while transitioning to the expected credit loss (ECL) framework, analysts said.

- MANOJIT SAHA

On Wednesday, the Reserve Bank of India published draft norms of the ECL framework which is proposed to come into effect from April 1, 2027.

According to analysts, banks with higher exposure to unsecured and micro finance loans will have a higher provisioning burden. "Under the new ECL regime, the top private banks, such as HDFC, ICICI and Axis, are well positioned as their strong underwriting, secured retail-heavy portfolios, and high contingent provisions position them for a smooth transition with minimal capital or P&L impact," Motilal Oswal said in a report.

The transition to expected loss framework from the current incurred loss framework will start from April 1, 2027. Banks will get four years to spread the provision of their existing book.