Monetary policy calls for robust risk management

The wider autonomy granted to banks is a remarkable feature of the new policy.

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Additional measures aimed at boosting the resilience and competitiveness of the banking sector include improving credit flow, promoting ease of doing business, simplifying foreign exchange management, enhancing consumer satisfaction, and internationalizing the rupee.

Some significant, long-term additional measures include the rollout of the Expected Credit Loss (ECL) framework, effective from April 1, 2027, which offers a transition period until March 31, 2031. The updated Basel III standards for the capital adequacy ratio will take effect starting April 1, 2027. Additionally, a draft of the Standardised Approach to Credit Risk will be introduced, which is expected to lower overall capital requirements for lending to MSMEs and residential real estate, including home loans.