Central Bank of India is set to operationalise its IFSC Banking Unit (IBU) at GIFT City in Gandhinagar by the first week of next month, according to MD and CEO Kalyan Kumar. As reported by PTI, the public sector lender has received regulatory approvals from the Reserve Bank of India and the International Financial Services Centres Authority (IFSCA) to establish the international banking unit. The bank has already posted a branch head and groundwork is in progress at the location. Kumar emphasised that "We would be in a position to open our IBU branch by first week of next month. The bank would certainly mobilise a good amount of forex business."
The IBU will provide Central Bank of India with access to international financial markets and allow delivery of a complete range of products to corporate clients with foreign currency funding requirements, Kumar told PTI. The bank will offer foreign currency loans, trade finance solutions, treasury and risk management products, and enhanced convenient banking solutions to customers. Kumar emphasised that the opening of IBU will be a significant milestone in the bank's growth story, helping expand international banking business and enabling provision of specialised banking services. The IBU will specifically offer forex services including pre-shipment and post-shipment finance, handling export bills on collection basis, outward remittances, inward remittances including advance payments, and maintenance of Exchange Earners Foreign Currency (EEFC) accounts.
Regarding the Expected Credit Loss (ECL) guidelines effective from April 1, 2027, Kumar stated that the bank has been preparing for several quarters to migrate to the ECL framework. According to PTI reports, the bank has made additional provision of ₹1,575 crore for stage 1 and stage 2 assets and maintains 100 per cent provision for stage 3 assets. Kumar confirmed there is no challenge in migrating to the ECL framework, as the bank has been working on improving credit underwriting quality and post-disbursement credit monitoring quality. "We have been working since so many quarters and we have made additional provision of Rs 1,575 crore for stage 1 and stage 2 assets. We have been making 100 per cent provision for stage 3 assets. Therefore, there is no challenge in migrating to the ECL framework," Kumar said.
Looking at the current macroeconomic and domestic scenario, Kumar said the bank is developing different models through which it can conduct stress testing to understand how its portfolio behaves in a dynamic process. As reported by PTI, the bank is prepared for migrating to the ECL framework, which requires banks to estimate losses using probability of default, loss given default and exposure at default, enabling earlier recognition of credit deterioration and more proactive risk management. The ECL framework sets slightly higher minimum provisioning requirements than current norms, resulting in increased provisions across most product segments. Kumar further said the Central Bank of India has brought significant improvements in credit underwriting quality and also post-disbursement credit monitoring quality.
