2017

Jun 21

Simplifying IND AS 109 for lenders


Summary

 

The new Indian Accounting Standards (IND AS 109), based on the IFRS 9 guidelines, are set to cause a structural shift in the way lenders provide for likely losses in their loan portfolio. As per analysis conducted by CRISIL Risk Solutions, IND AS 109 is likely to result in a significant rise in provisioning for lenders, especially on loans to lower-rated (riskier) entities or for long tenor projects.
 

During the web-conference, experts from CRISIL Risk Solutions addressed the following key questions:

  • What are the major changes being introduced by IND AS 109 in terms of impairment of loan assets and how do they impact lenders?
  • What is the concept of staging introduced by IND AS 109 and how can loans be classified across different stages based on various credit risk indicators?
  • How does provisioning methodology vary across different stages and how can one-year/'lifetime' expected credit loss be calculated?
  • What is the likely impact on provisioning compared to existing norms for loans of different risk profiles and tenors?