SBI In Best Position To Implement ECL Guidelines, Says Chairman CS Setty
Setty underlined that the transition to the new guideline will be smooth and will not exert undue pressure on capital ratios.
State Bank of India Chairman CS Setty has said that the country’s largest lender is well placed to implement the 'Expected Credit Loss' framework, which will come into force for banks from April 1, 2027.
Speaking to NDTV Profit after the Reserve Bank of India’s latest monetary policy announcement, Setty underlined that the transition to the new guideline will be smooth and will not exert undue pressure on capital ratios.
“ECL is a complicated system, and we have to fine-tune our internal models. But SBI is in the best position to implement these complex guidelines,” he said.
“The glide path that has been provided will ensure we are not exposed to any capital stress," Setty added.
The SBI chief, while talking about the macro environment, said that inflation number was anticipated to come down but the steep reduction came as a surprise.
While the central bank projects inflation above 4% in fiscal 2027, there is visible moderation. Growth is expected at 6.8% for fiscal 2025, though tariffs and geopolitical issues could impact the third and fourth quarter. Setty believes that the RBI is right in waiting for more clarity.
On mergers and acquisitions (M&A) financing, Setty welcomed RBI’s move to allow Indian banks into this space after nearly two decades. He pointed out that domestic lenders already have expertise through overseas offices.
In 2024, India recorded $120 billion worth of M&A deals. Earlier, only foreign banks could fund them. With stronger balance sheets, Indian banks are capable of participating now, he said. He also noted that this new change is not about replacing private credit—which is highly structured—but about giving corporates more financing options.
He also touched on RBI’s bold decision to remove the 2016 restriction requiring corporates with aggregate credit facilities above Rs 10,000 crore to compulsorily access bond markets. While this was originally aimed at reducing concentration risk in banks, Setty said the credit market has since deepened.
He also said that the Rs 10,000 crore threshold has become small. Today, risks can be better managed through bank-level borrower limits rather than system-wide restrictions, he pointed.
Setty struck a confident tone on the RBI's "banking reforms", stressing that India’s banking system is more resilient, better capitalised, and technologically prepared to navigate the upcoming regulatory transitions.
