Ind AS 107
Active
Financial Instruments: Disclosures
Prescribes the disclosure requirements for financial instruments, substantively identical to IFRS 7, with the most significant Indian-specific context being interaction with RBI's prudential disclosure requirements for banks and NBFCs.
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Conceptual Framework Linkage
Identical disclosure philosophy to IFRS 7
Ind AS 107 applies the IDENTICAL Conceptual Framework logic as IFRS 7 – recognised amounts alone tell users little about risk exposure or measurement reliability; genuine understanding requires SEPARATE, DEDICATED risk disclosures (credit, liquidity, market) alongside the fair value hierarchy.
HOW IND AS 107 MAPS TO THE FRAMEWORK
Relevance – risk disclosures give users forward-looking insight beyond recognised balances – IDENTICAL rationale to IFRS 7 Faithful representation – the fair value hierarchy distinguishes observable from unobservable inputs – IDENTICAL to IFRS 7 Dual regulatory layer for financial sector entities – for Indian banks and NBFCs, Ind AS 107's disclosures operate ALONGSIDE the Reserve Bank of India's (RBI) own extensive prudential disclosure norms – a genuinely India-specific dual-track feature, similar in spirit to IRDAI's role for insurers under Ind AS 104
Ind AS 107 was one of the LATER standards to become fully effective for Indian banks specifically (given phased regulatory transition), but its accounting SUBSTANCE mirrors IFRS 7 closely once applicable.
Two broad disclosure categories – identical to IFRS 7
CategoryPurpose
Significance of financial instrumentsUnderstanding financial position/performance in relation to financial instruments
Nature and extent of risksUnderstanding credit, liquidity, market risk exposure
This structure is IDENTICAL to IFRS 7's own two-category framework.
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Scope & Applicability
What Ind AS 107 covers
Ind AS 107 applies to ALL entities, for ALL types of financial instruments – IDENTICAL scope to IFRS 7, with the SAME scope exclusions (subsidiary/associate/JV interests, employee benefit plans, insurance contracts except embedded derivatives).
In practice, DETAILED sensitivity analysis and fair value hierarchy disclosures are most extensively applied by Indian banks, NBFCs, and other financial-sector-heavy entities.
Key definitions you must know
Credit risk / Liquidity risk / Market risk
IDENTICAL definitions to IFRS 7.
RBI
Reserve Bank of India – India's central bank and banking/NBFC regulator, prescribing its own extensive prudential disclosure requirements alongside Ind AS 107.
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Significance of Financial Instruments
Identical disclosure requirements to IFRS 7
Carrying amounts by Ind AS 109 category, net gains/losses, interest income/expense (effective interest method), impairment (ECL) reconciliation, reclassifications, collateral – ALL identical to IFRS 7's own requirements.
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Credit Risk Disclosures
Identical ECL-staging disclosures to IFRS 7
Credit risk management practices, quantitative/qualitative ECL information, three-stage movement analysis (12-month/lifetime not credit-impaired/lifetime credit-impaired), and concentration disclosure – IDENTICAL to IFRS 7's requirements, aligned with Ind AS 109's impairment model.
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Liquidity Risk Disclosures (with worked example)
Identical undiscounted maturity analysis to IFRS 7
Example 1: An Indian company's undiscounted maturity analysis
An Indian company has a term loan requiring ₹40,00,000 principal plus ₹3,20,000 interest in Year 1, and ₹40,00,000 principal plus ₹1,60,000 interest in Year 2.
Disclosed maturity analysis (UNDISCOUNTED): ₹43,20,000 due within 1 year, ₹41,60,000 due in 1-2 years – an IDENTICAL calculation methodology to IFRS 7.
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Market Risk & Sensitivity Analysis
Identical mandatory sensitivity analysis to IFRS 7
For EACH type of market risk, Ind AS 107 requires sensitivity analysis showing the effect of reasonably possible changes in the relevant risk variable on profit/loss and equity – IDENTICAL requirement to IFRS 7, commonly applied by Indian companies to interest rate risk on floating-rate borrowings and foreign currency risk given India's significant import/export exposure.
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RBI's Regulatory Role for Banks and NBFCs (with worked example)
A parallel prudential disclosure framework
The Reserve Bank of India prescribes DETAILED prudential disclosure norms for banks and NBFCs – including capital adequacy (Basel III-aligned), asset classification and provisioning (NPA norms), and specific format requirements for financial statements under the Banking Regulation Act, 1949 and RBI Master Directions. These operate ALONGSIDE Ind AS 107's own disclosures, similar in spirit to IRDAI's role for insurers.
Example 2: RBI vs Ind AS 107 disclosure layers for a bank
An Indian scheduled commercial bank prepares its annual report with Ind AS 107's credit/liquidity/market risk disclosures, PLUS RBI-mandated Basel III Pillar 3 disclosures and asset quality (NPA) disclosures under RBI's prudential norms.
BOTH disclosure sets are required SIMULTANEOUSLY – Ind AS 107 governs the ACCOUNTING STANDARD-based disclosures, while RBI's prudential framework governs SUPERVISORY, capital-adequacy-focused disclosures – a genuinely India-specific dual reporting burden for financial sector entities, with NO direct single-standard equivalent in a typical IFRS 7 jurisdiction (though comparable prudential regimes, e.g. Basel III itself, exist globally alongside IFRS 7 too).
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The Fair Value Hierarchy
Identical three-level hierarchy to IFRS 7/IFRS 13
Level 1 (quoted prices), Level 2 (observable inputs), Level 3 (unobservable inputs) – IDENTICAL to IFRS 7/IFRS 13, with Ind AS 113 (the Ind AS equivalent of IFRS 13) supplying the underlying fair value measurement framework.
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Disclosure Requirements
Identical disclosure requirements to IFRS 7
Carrying amounts by category, net gains/losses, interest income/expense Credit risk exposure, ECL staging, concentration Liquidity risk maturity analysis Market risk sensitivity analysis Fair value hierarchy classification and Level 3 reconciliation
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Critical Judgments & Estimates
Where management judgement matters most
SIGNIFICANT JUDGEMENTS
Fair value hierarchy classification – identical to IFRS 7 Reasonably possible market risk variable changes for sensitivity analysis
SIGNIFICANT ESTIMATES
Level 3 unobservable inputs Undiscounted contractual cash flow projections
For Indian banks/NBFCs, reconciling Ind AS 107's ECL-based disclosures with RBI's separate NPA/provisioning norms requires careful navigation of TWO PARALLEL, not always perfectly aligned, credit risk frameworks.
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Ind AS 107 vs IFRS 7 – Full Comparison
Comprehensive comparison table
FeatureIFRS 7Ind AS 107
Core disclosure requirementsSignificance, credit/liquidity/market risk, fair value hierarchyIDENTICAL – no substantive divergence
Regulatory overlay for banks/NBFCsVaries by jurisdiction, typically Basel-aligned local prudential rulesRBI's extensive prudential disclosure framework (Basel III, NPA norms) operates ALONGSIDE Ind AS 107
Effective date for Indian banksN/A (global)Ind AS applicability to banks was PHASED and, for some categories, further deferred relative to corporates generally – a genuinely Indian sequencing feature
Ind AS 107's accounting DISCLOSURE requirements are essentially IDENTICAL to IFRS 7 – the meaningful Indian context lies in the PARALLEL regulatory (RBI) disclosure regime for the financial sector, and the PHASED implementation timeline for banks specifically.
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Statement Mapping
Where every Ind AS 107 disclosure lands
Disclosure itemLocationNotes
Carrying amounts by category, net gains/lossesNotesIdentical to IFRS 7
Credit/liquidity/market risk disclosuresNotesIdentical to IFRS 7
Fair value hierarchyNotesIdentical to IFRS 7/13
RBI prudential disclosures (banks/NBFCs)Basel III Pillar 3 ReportParallel, separate regulatory disclosure, not part of Ind AS 107 itself
Ind AS 107 is entirely a DISCLOSURE standard, identical in structure to IFRS 7.
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Related Standards
Cross-reference map
StandardConnection
IFRS 7The GLOBAL counterpart standard, near-identically converged
Ind AS 109Supplies the recognition/measurement/impairment rules Ind AS 107 discloses
Ind AS 113Supplies the fair value hierarchy framework
Banking Regulation Act, 1949 / RBI Master DirectionsSupplies the PARALLEL prudential disclosure framework for banks and NBFCs
Quick-reference glossary
NPA (Non-Performing Asset)
RBI's regulatory classification for a loan/advance in default, subject to specific provisioning norms operating alongside (and interacting with) Ind AS 109's ECL model.
Basel III Pillar 3
The international banking regulatory framework's market discipline disclosure pillar, implemented by RBI for Indian banks alongside Ind AS 107.
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Quick-Reference Glossary
Credit risk / Liquidity risk / Market risk
IDENTICAL definitions to IFRS 7.
RBI
Reserve Bank of India – India's central bank and banking/NBFC regulator, prescribing its own extensive prudential disclosure requirements alongside Ind AS 107.
NPA (Non-Performing Asset)
RBI's regulatory classification for a loan/advance in default, subject to specific provisioning norms operating alongside (and interacting with) Ind AS 109's ECL model.
Basel III Pillar 3
The international banking regulatory framework's market discipline disclosure pillar, implemented by RBI for Indian banks alongside Ind AS 107.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows