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      Question

      The Expected Credit Loss (ECL) framework introduced by

      RBI represents a shift from the earlier provisioning system. What is the key advantage of this framework?Β 
      A Eliminates NPAs Correct Answer Incorrect Answer
      B Reduces bank capital requirements Correct Answer Incorrect Answer
      C Enables early recognition of credit risk using forward-looking estimates Correct Answer Incorrect Answer
      D Removes need for provisioning Correct Answer Incorrect Answer
      E Simplifies loan classification Correct Answer Incorrect Answer

      Solution

      ECL is forward-looking, allowing banks to anticipate losses rather than react after default.Β 

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