Ashwani Nexus

When the Expected Credit Loss (ECL) framework under Ind AS 109 / IFRS 9 was introduced, it promised a more forward-looking approach to credit risk. It moved us from the comfort of incurred loss accounting to the rigour of expected loss provisioning. On paper, it was a leap in sophistication for NBFC’s. In practice, it has exposed a series of nuanced challenges that every Finance professional , risk manager and auditor in India has learned to navigate. 🔷 The reality on the ground ▪️ ECL models are data-heavy, assumption-driven and highly sensitive to change. Even a small variation in PD, LGD or EAD, or a mild tweak in macroeconomic scenarios, can trigger large swings in provisions. ▪️ It is not unusual today to see provisioning volatility even when delinquency benchmarks remain steady — a perplexing outcome for management and regulators alike. Our traditional delinquency ratios are periodic, backward-looking indicators, while ECL is continuous and forward-looking. The two rarely move...

  Many times, being a financially literate person puts you in an uncomfortable position. You realize that, despite your knowledge, you haven’t been able to spread it widely enough to truly make a difference. That feeling hit me hard yesterday — in an Uber. The driver greeted me warmly: “Good afternoon, Sir. Please be seated.” Polite, well-spoken, educated — and soon, I discovered, an MBA and mid-level executive on sabbatical from a reputed company. Curiosity led to conversation. The story that followed left me shaken.Sometimes life gives a spin which you struggle to believe to be real. Four months ago, he was living comfortably in Bengaluru. Then tragedy struck. A call from his father in Indore — his grandfather had passed away. He rushed home. After the rituals, he returned to work. The very next morning came another call — his parents, uncle, and sister had met with a severe accident en route to Haridwar. His uncle and sister died on the spot. His parents fought for life ...