RBI may issue expected credit loss norms in FY24
According to these norms, banks will be required to classify financial assets into three categories–stage 1, stage 2, and stage -3 on the basis of assessed credit losses.
The Reserve Bank of India is likely to introduce various policy measures in 2023-24 like the guidelines for expected credit loss-based provisioning, it said in its annual report on Tuesday.
According to these norms, banks will be required to classify financial assets into three categories–stage 1, stage 2, and stage -3 on the basis of assessed credit losses.
In addition to this, guidelines on securitisation of stressed assets and a comprehensive review of the prudential framework (including the guidelines on resolution of stress in respect of projects under implementation) are also likely to be undertaken in 2023-24.
During the current financial year, the Reserve Bank of India (RBI) aims at expanding the ongoing pilots in the Central Bank Digital Currency (CBDC)-retail and CBDC-wholesale by incorporating various use cases and features.
The pilot is proposed to be expanded to more locations and to include more participating banks.
While Indian banks are strong and resilient, they need to stress test for new shocks, the report said.
The report called for banks and non-banking financial companies to constantly review capital buffers and liquidity positions.
Earlier this month, RBI Governor Shaktikanta Das in a speech to both private and public lenders re-emphasised the importance of a stable governance structure for the banking system and red-flagged certain gaps for both private sector banks and public sector banks.
“Today our banking sector stands out as strong and stable with CRAR at 16.1%, Gross NPA at 4.41%, Net NPA at 1.16% and provision coverage ratio at 73.20% at the end of December 2022. It is in times such as these that complacency may set in,” Das said in his speech.