Ind AS 109 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Under the head "Loans", Division III requires an NBFC to disclose bills purchased and bills discounted, loans repayable on demand, term loans, leasing, factoring, and others to be specified. Loans are classified under Ind AS 109 as measured at amortised cost, at fair value through OCI, at fair value through profit or loss, or designated at FVTPL, and the Ind AS 109 impairment loss allowance is disclosed.
The six sub-classifications
| # | Category | What it captures |
|---|---|---|
| (i) | Bills purchased and bills discounted | Trade finance exposure acquired against bills |
| (ii) | Loans repayable on demand | Exposure with no fixed maturity, callable at the lender's option |
| (iii) | Term loans | The core lending book with a contractual repayment schedule |
| (iv) | Leasing | Finance lease receivables |
| (v) | Factoring | Receivables acquired under factoring arrangements |
| (vi) | Others, to be specified | The guidance note gives intercorporate deposits, staff loans and loans to related parties as examples |
Category (vi) is expressly "to be specified". A material balance parked in "Others" without breaking it out defeats the purpose of the sub-classification — and the examples the guidance note gives are exactly the balances a reader most wants identified: intercorporate deposits, staff loans and loans to related parties.
Loans to related parties sitting undisclosed inside "Others" is a specific reporting weakness, and it intersects with the separate Schedule III disclosure of loans or advances to promoters, directors, KMPs and related parties.
The Ind AS 109 measurement overlay
Loans should be classified as per Ind AS 109 as measured at:
- amortised cost;
- fair value through other comprehensive income;
- fair value through profit or loss; or
- designated at fair value through profit or loss.
Note that the last two are separate categories. An instrument that is mandatorily at FVTPL because it fails the contractual cash flow characteristics test is not the same as one the entity has designated at FVTPL to eliminate an accounting mismatch, and the presentation distinguishes them.
The impairment allowance
The impairment loss allowance as per Ind AS 109 should be disclosed.
For an NBFC this is the single most scrutinised number in the accounts. Ind AS 109 requires expected credit losses rather than incurred losses, which means the allowance reflects forward-looking judgement about the book — and the disclosure is what lets a reader assess it.
Reading the two dimensions together
The sub-classification and the measurement classification are different axes, and a complete presentation shows both:
- Sub-classification answers what kind of lending is this? — term, demand, bills, lease, factoring.
- Measurement classification answers how is it measured and where do gains and losses go? — amortised cost, FVOCI, FVTPL.
A book that is predominantly term loans at amortised cost has a very different profile from one that is predominantly factoring at FVTPL, even at the same carrying amount.
Where the IBC reference comes in
The guidance note refers in the Division III disclosures to the term "Dispute" as defined under the Insolvency and Bankruptcy Code, 2016. That definition matters for classifying disputed balances in the ageing disclosures — a point where company law reporting and insolvency law meet, and one that is easy to miss because the definition sits outside the Companies Act entirely.
Compliance checklist
- Break the loan book into all six categories, and specify what sits in "Others".
- Separate intercorporate deposits, staff loans and related-party loans out of "Others".
- Classify each exposure under Ind AS 109, distinguishing mandatory FVTPL from designated FVTPL.
- Disclose the Ind AS 109 impairment loss allowance.
- Reconcile the related-party loan figures to the separate Schedule III related-party disclosure.
- Use the IBC definition of "Dispute" where the guidance note points to it.
Common mistakes
- A large unspecified "Others" balance.
- Related-party loans buried in the residual category.
- Collapsing mandatory and designated FVTPL into one line.
- Presenting loans net without disclosing the impairment allowance.