BankingPre-market
Banks seek flexibility on loss-given default provisioning
pre-market1 source ↓written by the desknot a recommendation
- ECL framework
- 30 Nov 2023
- assumption for secured
- 45% loss-given default (LGD)
- LGD for certain
- 5-10%
The Reserve Bank of India (RBI) is closing feedback on its draft expected credit loss (ECL) framework by 30 Nov 2023. Banks are requesting a reduction in the 45% loss-given default (LGD) assumption for secured exposures, arguing it may overstate potential losses. They suggest a more realistic 5-10% LGD for certain asset classes, particularly those secured by gold. This could impact provisioning strategies significantly.
Not investment advice. For informational purposes only.