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ICICI Bank ready to move ECL framework

July 25, 2023

ICICI Bank ready to move ECL framework
Private sector lender ICICI Bank on July 22 said the bank is ready to move to an expected credit loss (ECL) framework for provisioning.

“We would be happy and comfortable to move to an ECL-based framework. We are awaiting the final guidelines and internally we have made the assessment for the ECL framework,” Sandeep Batra, executive director of the bank said at a post-results media conference.
 
Under the ECL framework, banks will have to assess expected loss on their overall financial assets and make provisions after assessment, rather than making it after the loan turns into a non-performing asset (NPA).
 
A loan becomes an NPA if no repayment is made of interest or principal for a period of 90 days.
 
In May 2023, Dinesh Khara, Chairman of State Bank of India (SBI) said that for now, ECL is fiction.
 
“ECL is fiction and if at all it becomes a reality, we are very well equipped to deal with them without having any impact on our balance sheet.”
 
Khara, while addressing a post-results press conference in May 2023, also said that the bank is well equipped to handle the ECL norms.
 
Under the ECL norms, banks will be required to classify their financial assets into three categories – Stage 1, Stage 2, and Stage 3. The categorisation has to be done on the bank’s assessment of any credit loss on the assets.
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