Accounting for Leasing Transactions: IndAS 116 and IFRS 9

Servicing Asset and Servicing Liability: A new by-product of securitization under Ind AS 109

By Beni Agarwal (finserv@vinodkothari.com)

Securitisation has gained popularity in India in the recent times, however, one more concept that has grown parallel to it is, direct assignment. In fact, at times, direct assignments have overpowered securitisation in the Indian market[1]. Financial institutions have been using these extensively to address their liquidity issues. However, if there is anything that affected the financial institutions dearly, then it is the change in the accounting treatment under the Indian Accounting Standards (Ind AS).

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Classification and reclassification of financial instruments under Ind AS

By Team IFRS & Valuation Services (ifrs@vinodkothari.com) (finserv@vinodkothari.com)

Background

As India moves into Indian Accounting Standards (Ind AS), one standard which the accountants will be wary about is the Ind AS 109: Financial Instruments. This standard is an adaption of the International Financial Reporting Standard 9.  Ind AS 109 specifically provides for the manner in which the financial assets and financial liabilities are to be dealt with the books of the accounts. This standard itself is incomplete, as to draw a meaningful conclusion to any matter relating to financial asset or financial liability, one will also have to refer to the Ind AS 32. Read more

Accounting for Direct Assignment under Indian Accounting Standards (Ind AS)

By Team IFRS & Valuation Services (ifrs@vinodkothari.com) (finserv@vinodkothari.com)

Introduction

Direct assignment (DA) is a very popular way of achieving liquidity needs of an entity. With the motives of achieving off- balance sheet treatment accompanied by low cost of raising funds, financial sector entities enter into securitisation and direct assignment transactions involving sale of their loan portfolios. DA in the context of Indian securitisation practices involves sale of loan portfolios without the involvement of a special purpose vehicle, unlike securitisation, where setting up of an SPV is an imperative.

The term DA is unique to India, that is, only in Indian context we use the term DA for assignment of loan or lease portfolios to another entity like bank. Whereas, on a global level, a similar arrangements are known by various other names like loan sale, whole-loan sales or loan portfolio sale.

In India, the regulatory framework governing Das and securitisation transactions are laid down by the Reserve Bank of India (RBI). The guidelines for governing securitisation structures, often referred to as pass-through certificates route (PTCs) were issued for the first time in 2006, where the focus of the Guidelines was restricted to securitisation transactions only and direct assignments were nowhere in the picture. The RBI Guidelines were revised in 2012 to include provisions relating to direct assignment transactions.

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IMPACT OF FAIR VALUE CHANGES ON RETAINED EARNINGS DURING FIRST TIME IND AS ADOPTION

By Beni Agarwal (beni@vinodkothari.com)

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Comprehending Other Comprehensive Income (OCI) from NBFC’s Perspective

Gist of amended Schedule III of Companies Act, 2013

Indian Valuation Standards: Standardizing the rules of valuation in India