RBI's Bold Reforms: A New Era for Indian Banks

Global rating agencies have positively assessed the Reserve Bank of India's (RBI) comprehensive reform package, underlining its potential to fortify the banking operating environment.

S&P Global Ratings highlighted the RBI's decision to embrace an expected credit loss (ECL) framework alongside revised Basel III norms as a timely strategy that could enhance banking prospects amidst economic growth.

With the final implementation of ECL set for April 1, 2027, banks are provided a five-year transition period to adjust, aiming to mitigate any adverse impact on profitability and capital. Anticipated higher capital ratios under Basel III reforms are also expected to support ECL provisions.