BCT Digital, a global Fintech company specializing in BFSI, Predictive Analytics, and Risk Management, has launched of rt360-ECL solution from ‘IND AS 109 Product Suite’ for Expected Credit Loss (ECL) reporting. As stated in the official communiqué of the firm, the rt360-ECL is an integral part of the IND AS 109 Product Suite and has been designed exclusively keeping in mind the unique and specific nuances of Indian Financial Institutions and the Indian Regulatory Environment.
With the introduction of the global International Financial Reporting Standards-9 (IFRS 9) and its equivalent Indian Accounting Standards (IND AS) 109, financial institutions are moving towards adopting scientific methods for computing credit losses.
In February 2016, the Reserve Bank of India (RBI) introduced the first set of guidelines in this regard, which was later followed by a series of amendments, and the latest one was issued in March 2020. This amendment announced the implementation of the Indian Accounting Standards, including IND AS 109 for NBFCs and Asset Reconstruction Companies.
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IND AS 109 requires financial institutions to take the Expected Credit Loss (ECL) approach as opposed to the Incurred Loss approach. Under the ECL approach, credit losses must be granularly and systematically estimated and provided for throughout the life span of a loan. The rt360-ECL is a business-driven technology solution that enables banks to compute Expected Credit Loss as per regulatory guidelines, while addressing requirements such as Point-In-Time Probability of Default (PD), Validation and forward-looking estimates.
“During these unprecedented times, banks are facing huge credit losses as their customers suffer through the COVID-19 pandemic. Managing credit risk in a volatile financial market is very critical. If not carefully monitored, the systemic risks can easily snowball, and this can impact not only the banking network, but also the financial health of the country at a macroeconomic level. The rt360-ECL is an integral part of BCT Digital’s IND AS 109 product suite and has been exclusively designed keeping in mind the unique nature of the Indian regulatory environment and specific nuances of Indian financial institutions.” said Jaya Vaidhyanathan, CEO at BCT Digital.
