Post-crisis, there is convergence in the views of prudential regulators and accounting standard setters on the desirability of forward looking expected loss approach to loan loss provisioning. The IASB, FASB as well as the Basel Committee on Banking Supervision (BCBS) are actively engaged in finding a commonly agreed solution to this complex problem. 30.
While discussing the issue of loan loss provisioning, I would like to highlight the Reserve Bank’s concern on the issue of divergence in identification of Non Performing Assets (NPAs) and provisioning as certified by statutory auditors vis-a-vis the findings of the supervisory inspection conducted by RBI.