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truments that banks deal with.

A lot of the IFRS is based on judgment and fair valuation. India being a developing country does not have highly developed financial markets for all financial instruments, and hence application of the standards becomes difficult. Similarly in areas of loan losses and impairment, banks currently using limited judgment will face difficulty in converging to the IFRS.

银行业的影响——Implications on the banking sector

Hence it seems obvious that banks are going to have to make some major changes to converge to the IFRS and the implications of converging are going to be far reaching. Banks will have to:

Create and improvise on their past accounts data collection, information storage in a way that it can be utilized for decision making, such as the calculations of probable losses on a particular loan. This is due to the fact that a lot of the IFRS principles are based on judgment.

Banks in India will have to create fair evaluation methods which are in sync with market conditions at all times.

Create better risk assessment methods for the assessment of the risk exposure of any particular loan.

Make changes in the way calculations are being done, in the light of additional knowledge and past experience, such as the computation of discounted cash flows for accounting for the impairment of a loan.

Associate with a number of specialists in the area of credit risk calculation and a deep understanding of the applications of the IFRS on a bank's existing system to train existing employees and spread the knowledge and awareness about the implications of IFRS on the Indian banking system.

Assess the requirement to consolidate operations within a single entity based on an IFRS principle of consolidation of entities into a single group rather than have separate entities with separate accounting systems for each one.

Several process and system changes will have to be made for various measurements and calculations through processing of existing information and past experience. An example would include the decline in de-recognition of assets under the IFRS norms, resulting in lower returns on assets and a deferral of gains / losses on securitization transactions, as compared to those under the current Indian GAAP.

In order to carry out the necessary actions to converge with the IFRS, banks have started getting external advisors on board to train internal employees as well as facilitate and oversee the changes made to the current accounting practices. Training is an integral part of the convergence project, to understand complex aspects of IFRS and apply them to the different financial instruments and accounts within the bank.

IT systems will have to be re-looked at to ensure correct data collection, analysis and providing the required output in the IFRS formats. Building new formats for reporting and accounting will have to be implemented. Depending on how heterogeneous a bank's IT systems are, there will have to either be enhancements or a major overhaul, and it is necessary to assess this at an early stage, before too much investment is made in setting up a system which might prove to be inappropriate at a later stage.

Making internal and external stakeholders aware of the implementation process and how it will impact the accounts and financ