Banks brace for ECL and HTM valuation hit from April 2027

21 October 2026

Banks are finalising one-time provisioning estimates for the expected credit loss framework and revised HTM valuation norms effective April 1, 2027, with higher bond yields raising potential mark-to-market losses. Canara Bank raised its combined estimate to Rs 12,000-15,000 crore. - New accounting framework: ECL provisioning plus revised investment valuation (HTM) norms take effect from April 1, 2027. - Canara Bank raised combined one-time provisioning estimate to Rs 12,000-15,000 crore from Rs 10,000-12,000 crore earlier, citing possible MTM losses on HTM holdings. - Canara Bank's provision coverage ratio rose 175 bps to 95.34%; CET-1 capital at 12.80% against regulatory requirement of 8.5%. - Indian Bank estimates ECL impact of Rs 3,500 crore and has set aside Rs 2,500 crore; PNB trimmed its ECL estimate to about Rs 8,000 crore; Union Bank retains Rs 5,500 crore estimate. - Final transition cost depends on bond yields prevailing on April 1, 2027, since bond prices move inversely to yields. Why it matters: The final one-time hit hinges on yields on the implementation date, so customers and colleagues may ask how provisioning affects capital and lending capacity; the figures give a sense of the scale involved.

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