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The RBI has relaxed capital treatment for loans extended under ECLGS 5.0

ICICIdirect Research 17 Jun 2026 DISCLAIMER

News: The RBI has relaxed capital treatment for loans extended under ECLGS 5.0, allowing banks to assign a 0% risk weight to 75% of the guaranteed portion where guarantee settlement is expected within 30 days of invocation, while the remaining exposure will continue to attract a 20% risk weight as per existing norms

View: RBI has improved capital efficiency and incentivised banks to participate more actively in the scheme, supporting incremental credit growth without materially increasing balance-sheet risk.

Impact: Positive

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