State-owned Central Bank of India does not expect any significant impact from the Reserve Bank of India’s expected credit loss (ECL) framework, managing director and CEO Kalyan Kumar said, citing adequate provisioning buffers.
Under the ECL framework, banks will move from an “incurred loss” approach to a forward-looking, risk-based provisioning model, replacing the current overdue ageing-based system. Loans will be classified into three stages based on credit risk – stage 1 (low risk), stage 2 (significant increase in credit risk), and stage 3 (credit impaired).
“We are very conscious about the transition. For stage 1 and stage 2 assets, we have already made provisions of ₹1,525 crore, apart from maintaining 100% provisioning on Stage 3 assets,” Kumar told Mint.
As of March end, the bank had a loan book of ₹3.44 trillion. The bank is in the process of calculating the loan book as on FY26 into each stage as per ECL norms.
The framework aligns Indian banking regulations more closely with Indian Accounting Standards (Ind-AS) and requires lenders to estimate credit losses using key parameters such as probability of default, loss given default, and exposure at default.
Analysts say the shift enables earlier recognition of stress and more proactive portfolio management. However, it is expected to raise provisioning requirements for banks, potentially pressuring profitability and dividends, particularly for public-sector lenders, they warned.
Banks in India are currently well placed to switch to the ECL. "The main impact would be on transition, especially to factor in higher provisioning for loans, which, while being overdue, are not yet non-performing assets or NPAs (Stage 2 loans)," said Sanjay Agarwal, senior director at CareEdge Ratings.
“We expect a reduction in the capital adequacy ratio of banks by 60-70 basis points. The impact would be slightly higher on many public sector banks and lower on most private sector banks.”
Kumar said the bank is well-positioned to absorb the transition and does not foresee any material impact, adding that regulatory flexibility on provisioning at the time of migration will ease the shift.
Central Bank of India reported a 30% year-on-year decline in net profit for the March quarter (Q4 FY26) to ₹730 crore.
“The fall is primarily due to a ₹632 crore deferred tax adjustment following its transition to the new tax regime…We have shifted from the earlier tax rate of around 35% to 25%. Because of this, there was a one-time impact on deferred tax assets,” Kumar said. Adjusted for the one-off impact, profitability would have been higher than the year-ago period, he said.
Kumar said the bank expects to sustain growth momentum in FY27, guiding for deposit growth of 10–12% and advances growth of 14–16%, while maintaining CASA(Current Account Savings Account)ratio at around 48%.
For FY26, profit stood at ₹4,369 crore, 15.43% higher than a year earlier. The gross NPA of the bank is down by 51 bps in FY26 at 2.67%. Its net NPA fell 6 bps at 0.49% in FY26.
In FY26, the lender's total business grew 15.60% to ₹8.1 trillion against a target of 14–15%. Its deposits rose 13.38% to ₹4.7 trillion, and advances expanded 18.76% to ₹3.4 trillion, surpassing the 14–16% projection. Retail loans grew over 25%, while agriculture and MSME segments expanded 17.6% and 17.06%, respectively. Corporate lending grew about 14.5%. The lender's savings deposits rose over 10% to ₹2 trillion.
On retail lending, Kumar said auto loan growth of 16% leaves room for improvement compared with peers. “We are strengthening our sales and distribution. Around 500 people are being added in sales, and we are expanding our dealer network,” he said.
Focusing on digital transformation as a key pillar of growth, the bank has enabled end-to-end digital journeys for products such as home and vehicle loans, including instant in-principle sanctions. On the liability side, it has rolled out digital onboarding platforms and enhanced its mobile banking app with over 200 features, alongside a dedicated corporate mobile application.
“Banks that align with customer behaviour and provide convenient services will lead growth,” Kumar said.
The bank remains well-capitalised, with a capital adequacy ratio of 17.91% and CET-1 ratio of 15.61%.Capital adequacy ratio and CET-1 ratio are key indicators of a bank’s financial strength and loss-absorbing capacity.
“At present, we do not foresee any immediate requirement for capital,” Kumar said, adding that the board has approved raising up to ₹7,000 crore to retain flexibility if needed.
On meeting minimum public shareholding norms (MPS) set by the markets regulator Securities and Exchange Board of India (Sebi), Kumar said the bank will rely on the government’s decision regarding stake dilution through an offer-for-sale. “QIP (qualified institutional placement) is an option, but currently we are comfortable on capital. For MPS, we will depend on the government,” he said.
