Scribd Logo
Upload

Welcome to Scribd!

  • Impairment

    Uploaded by

    MARWA SALIM AL HUSAINI
    3 views1 page
    Impairment under IFRS 9 requires banks to recognize expected credit losses over the lifetime of financial assets that exhibit a significant increase in credit risk, or over 12 months for other assets. Banks must develop robust expected credit loss models and validate them periodically with approval from the chief risk officer and board. The Central Bank of India has provided guidance to standardize key issues like assessing credit risk increases and default definitions since banks can define these terms individually under IFRS 9.

    Original Description:

    Original Title

    IMP

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Impairment under IFRS 9 requires banks to recognize expected credit losses over the lifetime of financial assets that exhibit a significant increase in credit risk, or over 12 months for other assets. Banks must develop robust expected credit loss models and validate them periodically with approval from the chief risk officer and board. The Central Bank of India has provided guidance to standardize key issues like assessing credit risk increases and default definitions since banks can define these terms individually under IFRS 9.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    3 views1 page

    Impairment

    Uploaded by

    MARWA SALIM AL HUSAINI
    Impairment under IFRS 9 requires banks to recognize expected credit losses over the lifetime of financial assets that exhibit a significant increase in credit risk, or over 12 months for other assets. Banks must develop robust expected credit loss models and validate them periodically with approval from the chief risk officer and board. The Central Bank of India has provided guidance to standardize key issues like assessing credit risk increases and default definitions since banks can define these terms individually under IFRS 9.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    Impairment

    Impairment represents the most significant aspect of IFRS 9. As per IFRS 9, impairment is
    recognised, based on the Expected Credit Loss (ECL) method for financial assets that are not
    measured at fair value. Banks are required to recognise lifetime ECL on financial assets that
    exhibit a significant increase in credit risk. In other cases, 12-months ECL are recognised.
    We expect sophisticated banks to develop robust ECL models. Further, the CBO circular requires
    banks to validate the models periodically. Changes to these models are required to be justified
    by the chief risk officer and approved by the board.
    In our experience, it would be appropriate to include relevant model validation expertise within
    the IFRS 9 teams.
    IFRS 9 permits banks to formulate their own definitions of key issues, e.g., significant increase
    in credit risk, default, upgradation (curing) criteria, and incorporating forward looking
    assumptions, among others. These are internally defined and are likely to be diverse in practice.
    Hence, CBO has provided guidance on these issues to bring about uniformity and
    standardisation.

    You might also like