Background

Reserve Bank of India issued the final directions on Expected Credit Loss (ECL) framework, setting an implementation date of April 1, 2027. The new framework aims to align India’s prudential norms with global financial reporting standards under IFRS 9, enhancing transparency, comparability, and resilience in the banking sector. The transition from the traditional incurred loss model to a forward-looking Expected Credit Loss (ECL) framework, represents a significant shift in credit risk management to recognize credit stress at an early stage, well before it crystallizes into non-performing status and provisioning practices. For successful implementation of ECL framework, banks must prioritise strengthening their data infrastructure, ensuring quality and availability across systems. It is also required for the Banks to build robust internal models for PD, LGD and EAD with forward looking macroeconomic inputs is essential with a strong governance framework.

Objective

The objective of this workshop is to share practical implementation experiences and discuss implementation challenges, knowledge sharing and enable banks for a robust transition to ECL framework. 

Implementation-focused: Each session draws on practical experience from Indian bank ECL programmes, with worked examples, common pitfalls and open discussion.

Workshop Highlights

The program will deal with the following topics:

• Regulator’s Perspective on the ECL Framework
• ECL Governance: Roles and Responsibilities
• ECL Scope and Transition Arrangements
• Portfolio Segmentation and PD Modelling
• Loss Given Default (LGD)
• Effective Interest Rate (EIR): Principles and Treatment of Fees and Charges
• EIR: Computation Challenges, Systems and Transition
• Accounting for ECL
• Investment Portfolio: ECL and Fair Valuation in Practice
• Model Risk Management for ECL
• Practical Risk Challenges in ECL Implementation: Practitioners Speak
• Financial Reporting, Capital and P&L Challenges