As of February 2026, banks are preparing for the transition from the "Incurred Loss" model...

Question

As of February 2026, banks are preparing for the transition from the "Incurred Loss" model to the "Expected Credit Loss" (ECL) framework. According to the RBI's roadmap, the ECL framework is proposed to be fully implemented for all commercial banks by:

Bank Promotion Exam Guide · Accepted Answer

Correct Answer: C - Direct Answer: The proposed implementation date is April 1, 2027. Concept Definition: ECL (Expected Credit Loss) is a forward-looking provisioning model where banks estimate potential future losses rather than waiting for a default to occur. Structural Breakdown: 1. Implementation Date: April 1, 2027. 2. Glide Path: Banks are allowed a transition period (up to 5 years, ending 2031) to absorb the capital impact of the initial jump in provisions. 3. Stages: Assets will be classified into Stage 1 (12-month ECL), Stage 2 (Significant risk increase), and Stage 3 (Impaired). Historical Context: This moves Indian banking to align with global IFRS 9 standards, replacing the traditional IRAC norms (90-day rule) which were criticized for being "too little, too late."

Bank Promotion Exam Guide

Q11: As of February 2026, banks are preparing for the transition from the "Incurred Loss" model to the "Expected Credit Loss" (ECL) framework. According to the RBI's roadmap, the ECL framework is proposed to be fully implemented for all commercial banks by:

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