Answer-Under the transitional rules of the Expected Credit Loss (ECL) framework starting April 1, 2027, ban...

To minimize the immediate negative shock to capital adequacy when moving to ECL, the transitional provisions enable a relief window where the add-back fraction to CET1 capital begins at 80 in year one 2027-28, tapering to 60, 40, and finally 20 in the fourth year 2030-31.

Question

Under the transitional rules of the Expected Credit Loss (EC

L framework starting April 1, 2027, banks are permitted to "add back" a fraction of their additional ECL provisioning to their Common Equity Tier 1 (CET1) capital over a 4-year period to avoid capital shocks. What is the correct tapering sequence of this add-back percentage starting from the financial year 2027-28 down to 2030-31?

A 100%, 75%, 50%, 25%

B 80%, 60%, 40%, 20%

C 45%, 35%, 25%, 15%

D 50%, 40%, 30%, 20%

E 60%, 45%, 30%, 15%

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