Current Affairs · Banking Sector Reforms
With reference to the Reserve Bank of India's framework for Expected Credit Loss (ECL), consider the following statements: Statement-I: The framework marks a shift from the incurred loss approach to a forward-looking Expected Credit Loss (ECL) model. Statement-II: Under this framework, loss allowance is determined through a three-stage approach, in which Stage-1 uses a 12-month Probability of Default, while Stage-2 uses a lifetime Probability of Default when credit risk has increased significantly since initial recognition. Statement-III: The norms are intended to promote earlier recognition of credit stress and more timely provisioning by banks. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both Statement-I and Statement-II are correct and both of them explain Statement-III
- 2Both Statement-I and Statement-II are correct, but only one of them explains Statement-III
- 3Only one of Statement-I and Statement-II is correct, and that explains Statement-III
- 4Statement-I, Statement-II and Statement-III are all correct.✓
Correct answer
Statement-I, Statement-II and Statement-III are all correct.
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