Expected Credit Loss implementation case study

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The client is one of the largest non-banking financial services companies in India, with a focus on loans to the power sector.

We implemented the ECL model and converted their financials to the Indian Accounting Standards (Ind AS), which is a converged IFRS.

The following activities were performed in ECL implementation:

Setting up ECL policy and advised on decisions such as default definition, SICR criteria etc
Prepared the methodology documents for ECL and its risk components i.e. PD, LGD and EAD.
Computation of historical PD and converting it into forward looking PD using macroeconomic forecasts and scenario analysis.
Computation of LGD as per the methodology
Computation of EAD and applied the staging criteria on the portfolio
Created the ECL model and set up the process for independent use by the management
Prepared the ECL and credit risk disclosures in the financial statements

About our team

Chetan has more than 16 years of experience in servicing large national and multinational clients in the areas of Assurance, Indian GAAP, US GAAP and IFRS technical accounting advisory, specifically in the areas of financial instruments, leases, consolidation, revenue recognition, business combinations, and cryptoassets/ cryptocurrencies.

Chetan Hans

Partner, CFO services

Expected credit loss implementation

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