For practices auditing banks
The bank’s provision, worked out a second time.
Provisio computes a bank’s expected credit loss from the bank’s own data, independently of the bank’s system, and sets the result beside the bank’s figure. Every step can be followed and worked out again.
The current state
A provision that lives in a workbook.
The expected credit loss on a loan book is often checked in a spreadsheet of many sheets. The arithmetic may be right. What is hard is showing, a year later, how each figure was reached.
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Pasted figures
A result copied from one sheet to another stays as it was when the data beside it changes.
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Judgment without a record
A figure typed over a formula looks like every other figure. Who changed it, and why, is not in the file.
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One quarter over the last
This quarter’s file is last quarter’s file, edited. What moved between the two has to be rebuilt by hand.
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No second run
Nothing guarantees that the same inputs give the same provision when the work is repeated.
One calculation
From the bank’s data to a figure you can test.
Each step keeps what it was given and what it produced, so the provision can be traced back to the accounts and the history it came from.
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Data
Loan accounts, default history and economic data are loaded and checked. What fails a check is listed before anything is calculated.
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Models
The chance of default is modelled for each loan group from its own default history, with separate routes for groups that rarely default and for rated borrowers.
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Scenarios
A base, a downside and an upside view of the economy, each with a forecast and a weight the reviewer can see and question.
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Staging
Each account is placed in one of the three stages, with the reason it was placed there.
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Loss
Loss given default and exposure at default are worked for each account, over twelve months or the life of the loan, and discounted.
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Reconciliation
The result is set beside the bank’s own figures, and the difference is shown where it arises.
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Report
Adjustments made by management are recorded with their reasons, and the reports carry the run they were drawn from.
Follow the number
One account, from its stage to its provision.
Every account carries the path to its figure: why it is in its stage, the chance of default in each year, the loss in each scenario and the weight each scenario was given.
Term loan · small business
Stage 2More than 30 days past due at the reporting date
- Exposure at default
- ₹48,00,000
- Loss given default
- 45%
- Discount rate
- 10%
| Year | Chance of default | Still performing at start | Discount factor | Expected loss |
|---|---|---|---|---|
| 1 | 6.2% | 100.0% | 0.9091 | ₹1,21,745 |
| 2 | 5.5% | 93.8% | 0.8264 | ₹92,095 |
| 3 | 4.8% | 88.6% | 0.7513 | ₹69,048 |
| Scenario | Weight | Expected loss | Weighted |
|---|---|---|---|
| Base | 50% | ₹2,82,888 | ₹1,41,444 |
| Downside | 30% | ₹3,92,070 | ₹1,17,621 |
| Upside | 20% | ₹2,23,963 | ₹44,793 |
- Provision, weighted
- ₹3,03,858
- Bank’s figure
- ₹4,12,000
- Difference
- -₹1,08,142
- Workbook of live formulas
- Agrees
Illustrative account. No bank is shown.
For the working papers
Work another auditor can repeat.
The test of a re-performance is whether a second person reaches the same figure. The record is kept so that they can.
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Model workings
Each model is worked out again step by step on screen, and written to an Excel workbook of live formulas whose results are checked against the stored figures.
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Runs that repeat
A run keeps the data, the models and the assumptions it used, and can be run again later to the same result.
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Prepared and approved
A model is prepared by one person and approved by another before a provision is calculated on it.
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Quarter to quarter
Movements between two quarters are shown by stage and by loan group.
What it answers to
Built against the standard and the Directions.
The calculation follows the accounting standard and the Reserve Bank’s Directions on expected credit loss. Neither the product nor the company holds an approval from the Reserve Bank, and none is claimed.
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Ind AS 109
Expected credit loss in three stages, weighted across economic scenarios.
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RBI Directions
DOR.STR.REC.No.6/21.06.011/2026-27, dated 27 April 2026.
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Effective date
In force from 1 April 2027, with the first reporting on the position at 30 June 2027.
A clearer practice
Bring one bank’s numbers.
Provisio is set up with each practice, not opened by signup. Write to us with the bank audit you have in mind and we will show the calculation on it.