KARACHI: The State Bank of Pakistan (SBP) has issued final instructions for implementation of the International Financial Reporting Standard 9, or IFRS 9, in the banking sector.

In line with international best practices, SBP has issued final instructions on IFRS 9 for ensuring its smooth and consistent implementation in the banking industry, including banks/ DFIs/ MFBs, with revised implementation timelines. The SBP has now decided to extend the implementation date of IFRS 9 from January 1, 2022.

For banks having assets of PKR 500 billion or above, as per their annual financial statements and as of December 31, 2021, and for all Development Financial Institutions (DFIs), SBP has set the revised implementation date as January 1, 2023. For all other banks and Microfinance Banks (MFBs), SBP has extended the implementation deadline of IFRS 9 to January 1, 2024.

Earlier, SBP had set the implementation deadline for banks as January 1, 2022, which has now been revised on the request of the banks that are facing challenges in implementing the new standard.

FSR for CY21 unveiled: Financial system has performed well: SBP

SBP has been consulting with the banking industry since early 2018 for the adoption of IFRS 9 in Pakistan. The IFRS 9 is a global standard issued by the International Accounting Standards Board. The standard lays out the accounting treatment of classification, measurement of financial instruments and impairment of financial assets.

With the implementation of IFRS 9, the existing provisioning requirement, following incurred loss approach, will be replaced by Expected Credit Loss Provisions that will be based on expected losses on performing as well as non-performing portfolios. This approach is forward-looking and effectively measures the loan loss provisions based on credit risk models.

Copyright Business Recorder, 2022


Comments are closed.