Context
The Reserve Bank of India (RBI) has published a discussion paper on ‘loan loss provision’, proposing a framework for adopting an expected loss (EL)-based approach for provisioning by banks in case of loan defaults.
About
About the loan loss provisions:
The incurred loss approach requires banks to provide for losses that have already occurred or have been incurred. |
The delay in recognising expected losses under an “incurred loss” approach was found to exacerbate the downswing during the financial crisis of 2007-09. |
How the loan loss provision will work?
Benefits |
Concerns |
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Verifying, please be patient.