Leading public sector banks ( PSBs ) are building a combined war chest of around ₹20,000 crore in provisions as they prepare to transition to the Reserve Bank of India’s expected credit loss (ECL)-based provisioning framework from April 1, 2027.

Some of these lenders have already started front-loading provisions to cushion the impact of the new norms ahead of their rollout.

The ECL framework, which will replace the current ‘incurred loss’ model, aligns with the International Financial Reporting Standards (IFRS) and requires banks to adopt a forward-looking approach towards provisioning. Instead of setting aside funds after defaults occur, banks will now have to factor in potential future losses based on historical data and credit risk trends.

To ease the transition, the RBI has prov

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