Agreed. Since REC follows Ind-As, my understanding is that they would only be required to create a “reserve” in balance sheet and the added provisioning requirements will have no impact on P&L (as they follow ECL provisioning norms).
Further since their Capital adequecy ratio is high – the reserve (which will be excluded from CAD and tier 1 caluclations) – again would have no impact.
If anything banks may completely vacate the space leaving the entire market for REC/PFC.
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