Significance
Explain carrying amounts, categories, income, expense and accounting policies.
Standard orientation
What Ind AS 107 is designed to achieve
Require disclosures enabling users to evaluate the significance of financial instruments and the nature and extent of risks arising from them.
Scope: Applies to recognised and unrecognised financial instruments except specified interests, employee benefits, insurance contracts and share-based payment instruments. It complements Ind AS 32 presentation and Ind AS 109 recognition and measurement.
Credit risk
Show exposure, ECL methods, movements, collateral and concentrations.
Liquidity risk
Provide contractual maturity analysis and risk-management narrative.
Market risk
Provide sensitivity analyses for currency, interest-rate and other price risks.
Reading method: Requirements are paraphrased and grouped where they form one integrated rule. Apply the current notified text for final conclusions.
Full standard map
Paragraph-by-paragraph register
| Paragraphs | Requirement and simple decode |
|---|---|
| 1–3 | Objective and scope Establishes significance and risk disclosure objectives and defines scope. |
| 4–6 | Classes and level of detail Group instruments into appropriate classes and reconcile disclosures to statement line items. |
| 7–8 | Statement of financial position significance Disclose carrying amounts by Ind AS 109 measurement category. |
| 9–11 | FVTPL designations and credit-risk effects Explain designated assets/liabilities, changes attributable to credit risk and methods used. |
| 11A–11B | FVOCI equity instruments Identify designated equity investments, reasons, fair value, dividends and disposals/transfers within equity. |
| 12–12A | Reclassification Disclose reclassification date, amount, reason and measurement consequences. |
| 13A–13F | Offsetting disclosures Provide gross, offset, net and related master-netting/collateral information for instruments within scope. |
| 14–15 | Collateral Disclose pledged financial assets and collateral held that can be sold or repledged. |
| 16A | Loss allowance Present loss allowance information for relevant financial assets and commitments. |
| 17 | Compound instruments with embedded derivatives Disclose multiple embedded derivative features when values are interdependent. |
| 18–19 | Defaults and breaches Disclose details of loan defaults and breaches, including amounts and remedial status before approval. |
| 20 | Income, expense, gains and losses Disclose net gains/losses by category, interest revenue/expense, fee income and impairment. |
| 20A | Effective interest revenue Disclose interest revenue on credit-impaired assets and related amounts. |
| 21 | Accounting policies Disclose material measurement, designation, derecognition and risk-management policies. |
| 21A–24G | Hedge-accounting disclosures Explain risk-management strategy, hedge terms, sources of ineffectiveness, effects on financial position/performance and reserve reconciliations. |
| 24H–24J | Benchmark reform disclosures Explain transition to alternative benchmark rates and related risks where applicable. |
| 25–30 | Fair value Disclose fair values by class, methods, assumptions and exceptions when carrying amount approximates fair value or cannot be reliably determined under specific legacy circumstances. |
| 31–32A | Risk disclosure objective Provide qualitative and quantitative information enabling evaluation of credit, liquidity and market risk, including concentrations. |
| 33 | Qualitative risk disclosures Describe exposures, objectives, policies, processes and changes from prior period. |
| 34 | Quantitative risk disclosures Provide information based on internal key-management reporting plus concentrations and additional data when internal information is unrepresentative. |
| 35A–35C | Credit-risk disclosure objective Explain ECL practices and how credit risk changes affect amount, timing and uncertainty of future cash flows. |
| 35D–35G | ECL methods and assumptions Explain definitions of default, significant increase in credit risk, grouping, forward-looking information, modifications and write-offs. |
| 35H–35N | ECL quantitative information Reconcile loss allowances, explain gross carrying amount changes, modified assets, write-offs, collateral and concentration. |
| 36 | Credit-risk exposure and collateral Disclose maximum exposure, collateral and credit enhancements not reflected in the maximum exposure. |
| 37–38 | Obtained collateral and credit quality Disclose repossessed collateral and credit-quality information where relevant. |
| 39 | Liquidity risk Provide maturity analyses for non-derivative and derivative liabilities and explain liquidity-risk management. |
| B11A–B11F | Liquidity application guidance Use contractual undiscounted cash flows, earliest payment dates, guarantee exposure and disclose facilities including supplier finance. |
| 40–41 | Market-risk sensitivity Provide reasonably possible sensitivity analyses, methods and assumptions; alternative methods may be used when they better reflect risk. |
| 42A–42H | Transferred financial assets Disclose continuing involvement, retained risks, carrying amounts and cash-flow exposures for transferred assets. |
| 44 series | Effective date and transition Contains amendment-specific effective dates and relief. |
| 44JJ | Supplier finance transition Links the 2025 supplier finance amendments to annual periods beginning on or after 1 April 2025. |
| B11F(j) | Supplier finance and liquidity Supplier finance facilities are specifically considered in explaining how liquidity risk is managed. |
Major areas decoded
Technical requirements in simple language
Disclosure follows management
Quantitative information should reflect what key management receives, but additional disclosure is required when that view is not representative.
ECL transparency
Users need to understand model design, staging, macroeconomic scenarios, overlays, write-offs and how the allowance moved.
Liquidity maturities
Use contractual undiscounted cash flows and earliest dates the entity can be required to pay, not accounting carrying amounts.
Supplier finance
The 2025 amendment strengthens liquidity-risk transparency but does not by itself decide trade-payable versus borrowing presentation.
Hedge accounting
Disclose the economic risk-management story, not only a table of derivative fair values.
Offsetting
Gross and net exposure disclosures can be required even when accounting offset is prohibited.
Concentrations
Sector, geography, counterparty, product and collateral concentration can be decision-useful beyond headline maximum exposure.
Visual learning
Finin2min decision map
Editable SVG and high-resolution PNG versions are included in the batch assets.
Exceptions and highlights
What professionals frequently overlook
- Fair-value disclosure exemptions are narrow and do not remove broader risk disclosures.
- Internal-management data is a starting point, not a ceiling, when it is unrepresentative.
- Contractual maturity tables normally use undiscounted amounts, unlike balance-sheet carrying values.
- Guarantee liquidity exposure is generally the maximum amount callable in the earliest period.
- Offsetting disclosures may apply to enforceable master netting arrangements even when balance-sheet offsetting is not allowed.
- FVOCI equity disposal gains are not recycled, but disposal details and transfers within equity are disclosed.
- Supplier finance disclosures include liquidity-risk management even when arrangements remain trade payables.
- First-year supplier finance amendments provide specified comparative and interim relief.
Practical application
Transaction examples
Fact pattern
Treatment
Reason
Trade receivables under simplified ECL
Loss allowance reconciliation
Explain matrix assumptions, forward-looking adjustments and write-offs.
Undrawn bank facility
Liquidity-risk disclosure
Explain availability, covenants and management usage.
Foreign-currency borrowing
Market-risk sensitivity
Show reasonably possible currency movement impact.
Interest-rate swap hedge
Hedge disclosures
Explain strategy, notional, maturity, hedge ratio and ineffectiveness.
Reverse-factoring facility
Supplier-finance disclosure
Describe liquidity access and terms under relevant Ind AS 7/107 requirements.
Master netting agreement
Offsetting note
Show gross, recognised offsets and related collateral/netting amounts.
Accounting mechanics
Illustrative journal entries
Entries are simplified and may require tax, foreign-exchange or presentation adjustments.
No standalone journal entry
Ind AS 107 is a disclosure standard; journal entries arise under Ind AS 109, Ind AS 32 and other measurement standards.
ECL movement source data
Dr Impairment loss
Cr Loss allowance
Derivative fair-value source data
Dr / Cr Derivative asset or liability
Cr / Dr P&L or OCI
Supplier finance
Classification and entries depend on whether the original payable is derecognised and the nature of the replacement liability.
CA / finance / boardroom cases
Applied case studies
1. Liquidity maturity table
Applied caseA borrowing is callable on demand after a covenant breach, but the lender waives the breach after year-end.
Finin2min analysis: The contractual maturity analysis must reflect the reporting-date contractual position; cross-check Ind AS 1 classification and Ind AS 107 breach disclosures.
2. Management data is optimistic
Applied caseInternal risk reports exclude a material overdue customer segment.
Finin2min analysis: Supplement the disclosed quantitative data because internal information is not representative of reporting-date risk.
3. ECL overlay
Applied caseManagement applies a ₹50 crore post-model overlay for geopolitical risk.
Finin2min analysis: Disclose the rationale, methodology, assumptions, affected portfolios and movement so users can understand estimation uncertainty.
4. Supplier finance
Applied caseA bank pays suppliers on day 30 while the entity pays the bank on day 120.
Finin2min analysis: Assess presentation and cash flows separately; disclose arrangement terms and liquidity-risk effects under the 2025 amendments.
5. Currency sensitivity
Applied caseA company provides only a 1% sensitivity despite recent 15% volatility.
Finin2min analysis: Use a reasonably possible change considering current conditions and explain the basis.
Global comparison
Ind AS versus IFRS and US GAAP
| Topic | Ind AS | IFRS | US GAAP |
|---|---|---|---|
| Core risk disclosures | Credit, liquidity and market risk plus ECL and hedge disclosures. | Broadly aligned with IFRS 7, including supplier finance internationally. | ASC disclosures are distributed across topics and SEC rules. |
| Supplier finance | 2025 amendment effective from 1 April 2025. | IFRS 7 amendment effective from 2024. | SEC and US GAAP disclosures differ. |
| ECL | Detailed Ind AS 109 allowance and credit-risk disclosures. | Broadly aligned. | CECL disclosures use a different lifetime-loss model. |
| Offsetting | Gross/net/master-netting disclosures. | Broadly aligned. | US GAAP permits broader balance-sheet offsetting in some areas. |
| Market risk | Sensitivity analysis required. | Broadly aligned. | SEC market-risk disclosures may use tabular, sensitivity or value-at-risk formats. |
Implementation lens
Implications for key stakeholders
Risk / Credit
Own staging, default, scenarios, collateral and concentration data.
Treasury
Own liquidity maturities, facilities, hedges and supplier finance.
Finance
Reconcile categories, fair value, ECL and income/expense disclosures.
IT / Data
Maintain instrument-level data lineage and note automation.
Audit committee
Challenge overlays, liquidity stress and disclosure completeness.
Quality-control watchlist
Common errors and exam traps
- Using carrying amounts instead of contractual undiscounted maturity cash flows.
- Omitting qualitative explanations of risk-management changes.
- Providing ECL numbers without methods, assumptions and forward-looking information.
- Failing to reconcile loss-allowance movements.
- Omitting modified-asset and write-off information.
- Using internal data even when unrepresentative.
- Ignoring supplier finance in liquidity-risk management disclosure.
- Providing unsupported arm’s-length or low-risk assertions.
- Failing to explain hedge ineffectiveness.
- Omitting master-netting and collateral disclosures.
Finin2min Q&A
Frequently asked questions
1. Is Ind AS 107 a measurement standard?
No. It primarily prescribes disclosures.
2. Are maturity tables discounted?
Normally no; they use contractual undiscounted cash flows.
3. What must ECL disclosures explain?
Methods, assumptions, staging, forward-looking information, allowance movements and exposure.
4. Do supplier finance amendments decide liability classification?
No. Classification requires separate analysis.
5. Can management-report data be used directly?
Yes as a base, but supplement it if unrepresentative.
6. Are offsetting disclosures required when balances are gross?
They can be, for instruments subject to relevant netting arrangements.
Two-minute revision
Finin2min cheat sheet
SIGNIFICANCE → CATEGORIES → FAIR VALUE → CREDIT/ECL → LIQUIDITY MATURITY → MARKET SENSITIVITY → HEDGES → SUPPLIER FINANCE
Validation register
Primary and authoritative sources
ICAI Compendium 2025–26 Volume IPrimary or authoritative validation source.
Open source ↗
Open source ↗
ICAI Compendium overviewPrimary or authoritative validation source.
Open source ↗
Open source ↗
IFRS Foundation — IFRS 7Primary or authoritative validation source.
Open source ↗
Open source ↗
IFRS supplier finance projectPrimary or authoritative validation source.
Open source ↗
Open source ↗
Review date: 26 June 2026. Recheck later MCA notifications and ICAI compendiums before applying to a later period.
Practitioner update: Ind AS 107 disclosures after the 2026 amendment rules (October 2026)
2-Minute Summary
- Ind AS 107 is a disclosure standard: it explains the significance of financial instruments and the nature and extent of credit, liquidity and market risks.
- The 2026 notified rules add disclosure consequences linked to the classification-and-measurement amendments and contracts referencing nature-dependent electricity.
- The August 2026 amendments apply for annual reporting periods beginning on or after 1 April 2026; read them with the 2025-26 compendium.
- Supplier-finance, ECL, liquidity-maturity, collateral and hedge disclosures still require source data that reconciles to the financial instrument population.
Decision path
Scope→Facts→Recognition / classification→Measurement→Presentation & disclosure
Build disclosures from the instrument population, not from last year’s note
Start with a complete register of loans, trade receivables, investments, derivatives, guarantees, borrowings, supplier-finance balances and other financial instruments. Map each item to measurement category, carrying amount, income/expense effect and relevant risk. The qualitative story should reflect how management actually manages credit, liquidity and market risk; quantitative tables should reconcile to the ledger and Ind AS 109 models. Contractual maturity analysis generally uses undiscounted cash flows, so it should not be copied from the balance-sheet carrying amount schedule.
The 2026 amendment is now final - not an exposure-draft topic
Companies (Indian Accounting Standards) Amendment Rules, 2026, notified on 12 August 2026, amended Ind AS 107 alongside Ind AS 109 and other standards, with application for annual reporting periods beginning on or after 1 April 2026. For Ind AS 107, the changes include disclosures supporting amended classification-and-measurement requirements and contracts referencing nature-dependent electricity, together with consequential updates. Financial statements for affected periods should therefore read the current compendium baseline together with the notified 2026 rule text rather than relying on a pre-August consultation summary.
ECL, liquidity and new contractual-feature disclosures need a single evidence chain
For credit risk, explain methods, assumptions, forward-looking information, staging or simplified-approach mechanics and allowance movements at a level users can understand. For liquidity, reconcile contractual maturity data to treasury systems and explain concentration or funding risk. For instruments with contingent features or nature-dependent electricity exposures affected by the 2026 amendments, build a contract register that identifies the feature, accounting classification and required disclosures. The disclosures should agree with Ind AS 109 conclusions; the note cannot repair an unsupported classification model.
Worked example
A manufacturing group enters a long-term power contract whose settlement depends on the volume of electricity generated from a specified renewable source. For a reporting period beginning 1 April 2026, the finance team should not treat the arrangement only as an old executory-contract disclosure question. It must assess the notified Ind AS 109 requirements and then capture the related Ind AS 107 information required for the affected nature-dependent electricity contract, with the contract terms and exposure metrics retained in the reporting file.
Close checklist
- Use a complete financial-instrument register tied to the trial balance.
- Reconcile credit-risk and ECL disclosures to Ind AS 109 models.
- Prepare liquidity maturities from contractual undiscounted cash flows.
- Identify supplier-finance arrangements and related disclosures.
- Apply G.S.R. 725(E) for periods beginning on/after 1 April 2026.
- Map 2026 contingent-feature/electricity disclosures to the underlying contracts.
Questions practitioners ask
Is Ind AS 107 a measurement standard?
No. Recognition and measurement are mainly governed by other standards such as Ind AS 109.
Did the 2026 rules leave Ind AS 107 unchanged?
No. The notified 2026 amendment includes Ind AS 107 changes linked to financial-instrument amendments.
Are liquidity maturities normally based on carrying amounts?
No. The contractual maturity analysis generally uses undiscounted contractual cash flows.
Can an old disclosure note be rolled forward with new dates?
Only after revalidating the instrument population, risks, amendments and quantitative data.
Primary sources
- ICAI - Ind AS 107 text in the 2025-26 Compendium
- ICAI - Compendium of Indian Accounting Standards 2025-26
- ICAI notified Ind AS rules page - Companies (Indian Accounting Standards) Amendment Rules, 2026 (G.S.R. 725(E), 12 Aug 2026; effective for annual periods beginning 1 Apr 2026)
For periods affected by later notified amendments, read the compendium together with the applicable MCA notification listed by ICAI.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. Page-specific references are listed below.
- Primary category
- Accounting, Audit & Ind AS
- Official starting point
- www.icai.org