Bank of Maharashtra is expecting Rs 100-125 crore of additional expected credit loss (ECL) provisioning, or recognizing potential future credit loss, every quarter in order to meet the Reserve Bank of India’s (RBI) guidelines, managing director and chief executive officer Nidhu Saxena said on October 14.
The CEO said in the period of five years between 2027 and 2031, the bank has to maintain the ECL provision of Rs 2,500 crore. “We have already started doing ECL provision in our book and as per our estimate, the bank has to maintain Rs 100-125 crore provision every quarter,” Saxena said during the post earning conference call.
On January 24, 2025, Moneycontrol had reported citing sources that Bank of Maharashtra is expected to mark additional provisions of Rs 125-150 crore every quarter.
Expected Credit Loss (ECL) framework of provisioning for bad loans, with prudential floors, is proposed to kick in from April 1, 2027, the Reserve Bank of India (RBI) Governor Sanjay Malhotra said on October 1, during the monetary policy announcement.
The norms will be applicable to Scheduled Commercial Banks (excluding Small Finance Banks (SFBs), Payment Banks (PBs), Regional Rural Banks (RRBs)) and All India Financial Institutions (AIFIs), the Governor added.
The guidelines are expected to enhance credit risk management practices and promote better comparability of reported financials, across institutions. The framework is designed to be implemented in a non-disruptive manner with a suitable glide-path, the RBI had said during October 1 MPC statement.
The ECL model, proposed by RBI, has mandated that banks must recognize stress much earlier, in contrast to the existing regime in which they make provisions after losses are incurred.
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