To promote measures of convergence with globally accepted prudential norms, reserve Bank of India The U.S. today proposed that the country’s lenders should adopt the expected loss approach for the impairment allowances required to be maintained by them in respect of their exposures.
“The inadequacy of the loss outlook for provisioning by banks and its repetition, which exacerbated the recession after the 2007-09 financial crisis, have been widely documented. Among the key elements of the global response to these findings are There has been a change in the provision for the Required Credit Loss (ECL) regime,” the central bank said in the statement on development and regulatory policies.
RBI has also decided to introduce a framework for securitization of stressed assets Other than this property reconstruction companies route, similar to the framework for securitization of standard assets.
Thus, the central bank will also shortly issue a discussion paper on the relevant framework of the proposed framework, inviting comments on certain specific aspects.
In September 2021, the central bank had issued a revised framework for securitization of standard assets and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 currently provides a framework for such securities to be undertaken by ARCs. does. However, it has now decided on the new framework based on market feedback, stakeholder consultation and recommendations of the task force. secondary market development for corporate loans.