Ind AS will bring about a major change in the financial statements of banks and financial companies. Non-performing assets are currently provisioned based on RBI rules and are driven by number of days that the assets are overdue. This is a rule based system. Ind AS envisages a look-ahead system where expected losses are determined through statistical analysis and deep management judgement on both quantum of future cash flows as well as timing. The expected credit loss (ECL) model will have substantial impact on the profit as well as the quality of the Balance Sheet. The process will be quite challenging in terms of human efforts as well as IT involvement.
Another major development is development of Effective Interest Rate (EIR) mechanisms for each loan disbursed or availed. Under Indian GAAP, upfront fees and costs are either recognized in profit and loss on the day of accrual or straight lined over the tenor. Practices vary from company to company. Ind AS demands that such fees and costs be rolled into the regular interest rate to determine an EIR for each loan. This process is challenging and time consuming and requires a deep understanding of each costs, income and the loan itself. Floating interest rates pose fresh challenges in the determination of the EIR.
Derivatives, marking to market various positions, hedging, hedge accounting are special challenges in the financial sector.
Target audience
Finance and Accounts Officers of Banks and NBFCS
Credit Officers and Credit Risk Managers
Financial Institutions Group at Banks
Investors in Financial Sector and Fixed Income Analysts
Course Structure
Duration: 2 days
Day 1
Session 1
Overview of Ind AS
Fair value invasion
Comprehensive Income
Other Comprehensive Income
Session 2
Financial Assets
At amortized cost
At fair value through profit and loss
At fair value through comprehensive income
Session 3
Effective Interest Rate
Practical complexities and ways out
Session 4
Expected credit losses
Probability of Default
Loss given Default
Historical guidance
Management estimates
Day 2
Session 1
Expected credit losses continued
Practical caselets
Session 2
Financial liabilities
At amortized cost
At fair value through Profit & Loss
Own credit risk
Financial assets and liabilities managed together
Session 3
Structured instruments
Preference Shares – convertible and otherwise
Debentures – convertible and otherwise
Session 4
Derivatives
Hedging
Hedge Accounting
Trainer Profile
He is a financial consultant and a rank holder Chartered Accountant. He is associated as Adjunct Faculty with S P Jain Institute of Management & Research, which ranks among India’s top ten business schools. His areas of work are Ind AS Implementation, fair valuation of derivatives in the course of Ind AS implementation (including valuation of convertible bonds, convertible preference shares, cross currency swaps, principal only swaps, interest rate swaps, exotic financial products, futures, forwards, options and complex embedded derivatives). He also provides intensive advice on hedging, hedge accounting, hedge effectiveness testing and documentation. He is a regular trainer in the areas of Ind AS, IFRS, US GAAP, derivative trading, derivatives accounting and hedge accounting and has trained more than 300,000 participants over the last 20 years.
