Ecl

ECL, or Expected Credit Loss, is a financial metric used by lenders and financial institutions to estimate the potential loss they might face if borrowers default on their loans. Instead of waiting for actual defaults, ECL predicts future losses based on current data, including borrower creditworthiness, economic conditions, and historical default rates. This proactive approach helps banks set aside sufficient reserves to cover potential losses, ensuring financial stability and better risk management. Essentially, ECL is a forecast that captures the expected amount of money the lender might lose over the life of a loan.