Banks seek ECL relief amid rising bond yields
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Banks urged the RBI for relief on investment portfolios before the April 1, 2027 ECL framework starts.
- ✓High bond yields caused worries about capital loss.
- ✓"The ECL framework requires us to mark our HTM portfolios to fair value, which could result in significant provisioning or additional capital requirements," one banker said.
Story at a Glance
- Category
- Indian Markets
- Reported By
- Financial Express
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Banks urge RBI for relief on HTM investment portfolios ahead of the April 2027 ECL framework implementation, citing risks from high bond yields and potential capital erosion. Discussions focus on deferment and alternative accounting methods.
The yield on the benchmark 10-year government bond surged to 7.48% in October, driven by elevated crude oil prices, rising US yields and expectations of further interest rate hikes. It has since eased to 7.15% on Monday, but remains well above the 6.75% recorded at the end of June.
Lenders have sought either a deferment of the framework's implementation for investment portfolios or an alternative accounting treatment that would spare them from recognising mark-to-market losses, people familiar with the discussions told FE. They have also questioned the rationale for the proposed change.
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Financial Express
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