Bank of India has not made any provisions under the expected credit loss, or ECL, framework yet and plans to begin front-loading them from the December quarter, Managing Director and CEO Rajneesh Karnatak said during the bank's post-results analyst call on Oct. 23. The bank expects to make these provisions in the December and March quarters, ahead of the new framework taking effect from April 1, 2027.
The bank is currently working on ECL-related calculations, technology requirements, and other preparatory measures, with a consultant already onboarded. Karnatak said the bank would seek board approval for its preparedness and provisioning plan before beginning the exercise.
ECL Impact Could Be Spread Over Four Years
Bank of India expects the transition to the ECL framework to affect its capital adequacy ratio, or CRAR, by around 0.5% annually over the next four years, Karnatak said. The bank has not disclosed the total amount of provisions it expects to make, saying it would provide clearer guidance after the board reviews the plan.
The bank's CRAR stood at more than 17% as of Sept. 30, compared with the regulatory requirement of 11%. The bank had also reported a net profit of more than Rs 6,000 crore in the first half of fiscal 2027 and expects full-year profit of around Rs 12,000 crore if the current run rate continues.
The management expects the bank's profitability to help absorb the additional provisioning burden without a significant impact on capital.
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Lower Stress In Standard Assets
Management also indicated that improving credit monitoring and a decline in special mention account, or SMA, exposures are factors that could keep its ECL provisioning requirement at a manageable level.
Karnatak said SMA accounts with exposure of Rs 5 crore and above had declined sharply to Rs 2,553 crore from more than Rs 6,000 crore in September 2025.
Executive Director P. R. Rajagopal said the bank had more than Rs 2,500 crore in provisions for bad and doubtful debts, compared with around Rs 1,500 crore in the corresponding period a year earlier. Provisions for standard assets stood at around Rs 400 crore.
Karnatak said the bank expects to provide clearer ECL estimates during its December-quarter results presentation, after obtaining board approval.
Bank of India Q2 Results Highlights
- Profit rises 25.4% to Rs 3,202 crore vs Rs 2,555 crore YoY
- Net NPA at 0.42% Vs 0.51% QoQ
- Gross NPA at 1.6% vs 1.81% QoQ
- Provisions at Rs 797 crore vs Rs 441 crore YoY
- Provisions at Rs 797 crore vs Rs 964 crore YoY
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