RBI To Implement ECL Framework, Full Basel-III Norms From April 1, 2027

The Reserve Bank of India proposed to make the expected credit loss framework applicable to banks, effective April 1, 2027. The central bank will also give a glide path of nearly four years to smoothen any impact from higher provisioning, if any.

"Further, it is proposed to make the revised Basel III capital adequacy norms effective for commercial banks from April 1, 2027," RBI Governor Sanjay Malhotra said in a statement on Wednesday following the monetary policy announcement.

RBI also suggested lower risk weights for certain segments to reduce the capital requirements for banks.

"It may be recalled that capital requirements for operational risk have already been finalised in 2023, whereas the capital requirements for market risk are under finalisation after receipt of comments from the public," Malhotra added.

Malhotra's comments followed the RBI's decision to keep the repo rate unchanged at 5.5% for the second consecutive time, in what was a unanimous decision from the MPC.

RBI has also retained 'neutral' stance, with most of the commentary from the governor alluding to lower inflation.

The RBI lowered its inflation projection for FY26 to 2.6% vs 3.1% earlier, with Malhotra stating, "There has been a significant moderation in inflation."

The inflation projection for Q2FY26 and Q3FY26 stands at 1.8% while for Q4FY26 stands at 4%.

The RBI governor further stated that the recent GST cuts will lead to reduction in prices in the CPI basket.

Real GDP growth for FY26 has been revised upward to 6.8% from the earlier estimate of 6.5%, which indicates stronger-than-expected economic performance.

This comes on the back of a strong Q1FY26 GDP growth number, which stood at an impressive 7.8%.