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?