Macquarie has highlighted significant regulatory changes expected to shape the banking and financial sector in 2025. These regulations could impact PSU banks, NBFCs, and project financing norms while revisiting risk weights and liquidity metrics.
Key Regulatory Norms to Watch:
- ECL (Expected Credit Loss) Norms:
- The introduction of ECL norms is likely this year, with PSU banks expected to feel a larger impact compared to private players.
- These norms are designed to enhance the provisioning framework, emphasizing forward-looking risk assessments.
- Project Finance Norms:
- Clarity is anticipated on the framework governing project financing, which could influence credit disbursement policies for infrastructure and long-term capital-intensive projects.
- LCR (Liquidity Coverage Ratio) Norms:
- LCR norms may see a relaxation, potentially offering banks greater flexibility in maintaining liquidity without stringent thresholds.
- Top-Up Loans:
- New restrictions on top-up loans could disproportionately impact NBFCs, especially those heavily reliant on unsecured lending.
- This could lead to a reevaluation of NBFC business models focused on consumer financing.
- Bank Ownership of NBFCs:
- Expected regulations might clarify ownership rules for banks with stakes in competing NBFC businesses, addressing conflicts of interest and promoting fair competition.
- Increased Provisions and Risk Weights:
- Banks may face higher provisions and risk weights under revised frameworks, requiring them to hold more capital against certain categories of assets.
- This could impact lending practices and balance sheet strategies.
Implications for the Sector
The upcoming regulatory changes could enhance stability and transparency in the banking system. However, they may also introduce operational challenges, particularly for PSU banks and NBFCs. The potential easing of LCR norms and clarity on project financing frameworks could offer some relief.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor before making investment decisions.
