Getting home auto loans will be difficult from 2027:Those with CIBIL score less than 730 will face difficulties

RBI’s new rule ‘ECL Direction-2026′ is going to be implemented from April 1, 2027. Under this, if a customer defaults on two loan installments (EMI), banks will have to set aside up to 12 times more money. Setting aside means that this much money will be deducted from the bank’s balance sheet, which means banks’ profits could reduce by approximately ₹42,000 crore. In such a situation, banks will hesitate to give loans to people with weak CIBIL scores (less than 730). Even if they give loans, they will increase interest rates or demand more collateral (guarantee). The worrying thing is that more than half (approximately 62%) of the country’s loan applicants have a CIBIL score less than 730. In such a scenario, from next year onwards, it will become very difficult for these people to get home, auto and education loans. Banks will now focus more only on premium customers. Federal Bank’s Chief Risk Officer Damodaran C says – After the new rules, banks will lend at higher interest rates to customers who pose greater risk in lending. Those with better credit scores will get more concessions. There will be more focus on early risk identification and recovery. Focus on Premium Customers 1. How will the new system change the way banks work? Under the new rules, banks will have to estimate in advance how much loan could turn bad in the future and set aside a large amount beforehand. Currently they do this after the loan becomes bad (90 days). 2. How will banks assess future defaults? They will examine things like customer’s payment record, changes in CIBIL, reduction in income, risk of job loss, and loan to value ratio (loan amount compared to property value). 3. How much amount will be set aside for how many days of missed installments? On a home loan of ₹25 lakh, for a 30-day EMI default, banks currently have to set aside ₹10,000, which has been increased to ₹25,000 in the new rules. For 31 to 60 days also it is ₹10,000, which has been increased to ₹1.25 lakh. For more than 91 days, Rs. 3.75 lakh (15%) had to be set aside, now it will be directly ₹5 lakh. 4. How many are the 38% that will be focused on more? There are approximately 7 crore premium customers with a CIBIL score of 730+.