08/06/2026
Your is about to become more important than most people realize.
The Reserve Bank of India has finalized the ECL (Expected Credit Loss) system for implementation from 1 April 2027.
This is a massive structural shift in how banks will evaluate lending risk.
Till now, most loans were treated as “healthy” as long as EMIs were paid on time.
Going forward, banks will increasingly evaluate the probability of future stress as well not just present repayment behaviour.
That changes everything.
A lower CIBIL score will now carry a much bigger cost for lenders because banks may have to create higher provisions against such borrowers under the new framework.
And when the lender’s cost rises, the borrower eventually pays through:
- Higher interest rates
- Lower credit limits
- Tighter eligibility checks
- Slower approvals
- More manual underwriting
- Higher chances of rejection
This will especially impact unsecured products like:
- Personal loans
- Credit cards
- Consumer durable loans
- BNPL products
The era of easy instant approvals is slowly fading.
Even NBFCs and fintech lenders are becoming stricter because capital itself is getting more risk-sensitive.
