By Dhruv Parikh & Priyanka Shetty, Respectively Partner and Director, Financial Services Risk Consulting, EY India

Close on the heels of the Monetary Policy Committee’s announcement on October 1 to implement the expected credit loss (ECL) framework by fiscal year 2027 for banks, draft guidelines detailing the proposed ECL methodology were issued on October 7. This initiative is more than a regulatory update; it signifies a strategic evolution in how Indian banks assess, manage, and communicate credit risk. By adopting a forward-looking expected loss approach aligned with global standards, Indian banks would position themselves for greater resilience, transparency, and agility in a dynamic economic environment.

Globally, the transition to International Financial Reporting Standard 9 h

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