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Product Coverage Document:

CARE Kalypto
IFRS System (Implemented by CMS IT
Services)

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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Table of Contents
Product Overview ................................................................................................................................... 3
Core Functionality of the IFRS Solution .............................................................................................. 4
1.

Interfacing ....................................................................................................................................... 4

2.

GL Tallying ....................................................................................................................................... 4

3.

IFRS treatment and computations for assets and liabilities ........................................................... 5

Impairment ......................................................................................................................................... 5
Debt Instruments treatment using EIR ............................................................................................... 7
Preferential Interest Costs .................................................................................................................. 8
Treatment of Non Staff Deposits ........................................................................................................ 8
MTM computation for derivatives ...................................................................................................... 8
MTM computation for equity ............................................................................................................. 8
IFRS treatment for operating leases ................................................................................................... 8
IFRS treatment for bank guarantees ................................................................................................... 8
IFRS treatment for refundable deposits ............................................................................................. 8

4.

Preparation of Charts of Accounts .................................................................................................. 8

5.

Risk Related Disclosure Reports...................................................................................................... 9

6.

MIS reports and Executive Dashboards ........................................................................................ 10

7.

Reference Data and Admin ........................................................................................................... 10

Reference Data ................................................................................................................................. 10
Batch Process Admin......................................................................................................................... 11
Branch, User, Role and Menu Access Admin .................................................................................... 11

8.

Implementation Approach ............................................................................................................ 12

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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Product Overview
CARE Kalypto/IFRS helps a Bank bridge the gap between the existing accounting standards
and IFRS standards. The solution enables a bank to compute its IFRS related provisions
expeditiously, saving precious time and resources.
The solution is capable of generating charts of accounts and related disclosure reports. It
helps in carrying out the adjustments in the charts of accounts based on the difference
between IFRS and earlier accounting standards in order to assess the impact of adopting IFRS
standards.
The solution is IAS 32, IAS 39, IFRS7 and IFRS9 compliant and has the capability to adapt to
other future standards.
The solution adopts country specific version of IFRS standards and best practices. It will be
able to help your bank meet the requirements mentioned in RBI circular dated June 23, 2016
and RBI note RBI/2015-16/315 DBR.BP.BC.No.76/21.07.001/2015-16 dated Feb 11 2016.
This solution is created by CARE Kalypto (A CARE Ratings company) and is brought to you
along with CMS IT Services (A Blackstone Portfolio Company) as its Implementation partners.

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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Core Functionality of the IFRS Solution

CARE Kalypto/IFRS
Interfacing
GL Tallying
IFRS treatment and computations for assets and liabilities
Preparation of Charts of Accounts
Risk Related Disclosure Reports
MIS Reports and Executive Dashboards
Reference Data and Admin

1. Interfacing
The Kalypto IFRS solution is capable of easy interface into Core Banking software and other
applications. As an implementation approach, we get ready with the key APIs tested even as we are
performing the initial system study for the Bank.

Exposures, positions, balances of loans, investments, assets and liabilities are fetched
from various systems and consolidated in the CARE Kalypto system through a staging area.

Excel upload facility to add manual adjustments/positions into the CARE Kalypto system.

CARE Kalypto and partners have experience in interfacing with various systems such as
Core Banking, Treasury, Leasing, Pawning, Credit Cards, Margin Trading etc.

Our core technological approach and domain expertise has helped us evolve best
practices for validation of data. Our approach excludes junk data and ensures that clean
data is used for further computations.

2. GL Tallying
Our GL tallying step is robust and provides a validated super set of data that ensures end to end data
validation

Aggregate balances of data fetched from various systems are tallied with respective GL
balances in CARE Kalypto system.

This ensures that complete set of data is fetched into and used by CARE Kalypto system
for its computations

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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3. IFRS treatment and computations for assets and liabilities

Care

Kalypto

IFRS

is

modular

product

based

on

computation

of

instruments/loans/deals/investments based on IFRS accounting standards. A few important

modules could be listed as below: -

Impairment
(Computation of Expected Credit Loss (EL) for loans of customers)
Impairment module covers classification of accounts into stages as per the credit profile for
the borrowers as stipulated in IFRS 9 standards, initial recognition and subsequent evaluation
of credit quality, computation of 12-month PD or Lifetime PD and calculation of expected
credit loss. It also supports workflow between delegated authorities to enable maker-checker
process of capturing and authorizing of evaluation of credit quality and estimated cash flows.
The system allows taking the original interest rate (and not the interfaced interest) for
discounting cash flows in case of NPAs and rescheduled loans. System also carries out
computation of unwinding of interest amount and passing of accounting entries for the same.

CARE Kalypto/IFRS system screenshot of questionnaire for evaluating early warning

signals for stage-wise classification of customers based on credit profile.

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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CARE Kalypto/IFRS system screenshot of showing interest rate override option and
estimation of future cash flows for significant customers.

Once PDs and LGDs are computed, EL is calculated as a product of PD (12-month PD or

Lifetime PD, based on the credit quality stage of the account), LGD and Exposure at Default
(EAD) to arrive at collective pool provisions. Different models to compute PD such as
transition matrix, net flow rate method, PD method for pawning etc. are supported in the
system. For LGD, system uses discounting of recovery amount and cost of recovery
amount to arrive at LGD rates. CARE Kalypto/IFRS system provides a facility to use
PDs/LGDs different from that calculated using models, based on macro-economic or
industry specific parameters. The system has the economic factor adjustment model,
which considers the impact of current macroeconomic and other factors on the statistical
PD calculated by the system.

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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CARE Kalypto/IFRS system screenshot of collective pool definition

CARE Kalypto/IFRS system screenshot of economic factor adjustment model

For IFRS9, system is capable of computing 12 month expected credit loss and lifetime
expected credit loss depending on the credit quality

Debt Instruments treatment using EIR

IFRS treatment for Debt Instruments using effective interest rates (EIR)
This module covers computation of effective interest rates (EIR), carrying value based on
amortization of discount/premium using EIR, amortization of transaction costs, fair value
adjustments etc. for different interest-sensitive instruments such as TBills, TBonds, Floating
rate bonds, Reverse Repo, Repo, Debentures-Fixed/Floating / StepUp / StepDown.

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

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CARE Kalypto/IFRS system screenshot of formula builder for Debt Instruments related
calculations.

Preferential Interest Costs

The module covers amortization of prepaid employee cost due to preferential interest rate
charged/provided to staff.

Treatment of Non Staff Deposits

This module computes difference in carrying value of non-staff deposits on compounding
interest rate basis and that on simple interest rate basis.

MTM computation for derivatives

This module computes MTM for derivatives.

MTM computation for equity

This module computes fair value adjustments for equity instruments and based on portfolio
(AFS or HFT), passing of accounting entry through P&L or through other comprehensive item
reserves.

IFRS treatment for operating leases

This module covers computation of difference between actual rental amounts charged and
average rental amount for a specific tenor of the operating lease

IFRS treatment for bank guarantees

This module covers amortization of commissions over the tenor of the guarantee.

IFRS treatment for refundable deposits

This module covers amortization of refundable deposits income over the tenor of the
deposits.

4. Preparation of Charts of Accounts

Passing of double accounting entries in compliance with IFRS accounting standards.

Preparation of P&L, Balance Sheet and Notes to Accounts in compliance with IFRS
accounting standards.

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Financial Statements can be viewed at branch level, entity group level and head office
levels.

CARE Kalypto/IFRS system screenshot of financial statements

5. Risk Related Disclosure Reports

Risk related disclosure reports can be generated from the system.

These reports can be generated Quarterly and Annually

The disclosure reports can be view in Excel and PDF formats

The reports can be customized by the bank based on the latest disclosure guidelines.

CARE Kalypto/IFRS screenshot of Risk related disclosure reports generated in an excel template

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6. MIS reports and Executive Dashboards

MIS reports and Executive Dashboards with drilldown facility to the most granular level

Pre-defined and Custom Reporting Framework

The following are some of the MIS reports and executive dashboards that becomes a part of
the system

Comparison of Individual Impairment Provisions over last four quarters

Comparison of Collective Impairment Provisions over last four quarters

Impact of IFRS on the account statements

CARE Kalypto/IFRS system screenshot on product-wise collective impairment provisions

7. Reference Data and Admin

The captioned functionality has the following modules: Reference Data

Static Data, System Configurations and Regulatory figures are setup and defined under
this module

Complete user flexibility is offered in terms of editing these figures so as to minimize

banks dependence on the vendor in case of regulatory changes

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CARE Kalypto/IFRS system screenshot of reference data setup of threshold to identify

significant customers

Audit trail is maintained for any additions/modifications/deletions carried out in

reference data

CARE Kalypto/IFRS system screenshot of audit trail report

Batch Process Admin
The captioned module enables batch process to be run to arrive at various computations
Branch, User, Role and Menu Access Admin
Operations Admin will carry out addition/deletion of branches, users, roles and menu
accesses to CARE Kalypto menus.

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8. Implementation Approach
Customization & Testing
Phase
GAP Elicitation Phase
UAT & GO Live
INTERFACING

CUSTOMIZATION

Initiation & Planning

Phase

DESIGN
GAP ANALYSIS

PLANNING

INITIATION

Project Plan
Test Plan
Resource Plan
Risk Mitigation Plan
Project Execution Plan
Migration
Methodology

Impact Analysis
Prepare/ Modify
design documents

Integration Testing
Application Mock
Run

Preparation of UTC
Coding/Interfacing
Perform Unit
testing
System Testing

Product Walkthrough
Product Gap Analysis
Data Gap Analysis
Gap Analysis Document

Continual Project Assessments by Process Coach, Project Manager and Delivery Head

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services

Product Workshop
System Configuration
System Testing
User Training
UAT Sign-Off
Production Roll-Out

Deployment Phase

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About CARE Kalypto
CARE Kalypto Risk Technologies and Advisory Services Pvt. Ltd. is a specialized software products
company addressing the areas of Credit Risk, Operational Risk, Market Risk, Asset-Liability
Management, Funds Transfer Pricing and IFRS.
CARE Kalypto is a subsidiary of CARE Ratings, Indias premier credit rating agency.
CARE Kalyptos customers include the likes of Commercial Bank of Ceylon Plc (Sri Lanka), Sampath
Bank Plc (Sri Lanka), Union Bank of Colombo (Sri Lanka), Vietin Bank (Vietnam), Mashreq Bank (UAE),
Invest Bank (UAE), Al Masraf (formerly ARBIFT, UAE), CRDB Bank (Tanzania), Skye Bank (Nigeria), which
are established, reputed and trend-setters in their respective geographies.
CARE Kalypto is managed by a team of technocrats who have worked with large reputed software
companies in the similar field and have the credibility and track record of building & selling high
performance, mission-critical solutions for the banking & financial services vertical, globally.
The Top Management has a collective experience spanning ~ 125-years in the BFSI space.
The company offers
Kalypto/Credit, a credit risk management solution that enables banks and institutions to accurately
assess credit exposures in multiple dimensions;
Kalypto/Ops, an operational risk management solution that facilitates assessment, identification,
measurement, monitoring, control, and reporting of losses;
Kalypto/V@R, a market risk management solution that integrates with the banks existing treasury
system to upload position data; and Kalypto/CAR, which computes the capital adequacy ratio of the
bank ;
Kalypto/ALM, an asset liability management solution that provides the analysis of the balance sheet
in terms of structural liquidity gaps, interest sensitivity, and dynamic liquidity;
Kalypto/FTP, a fund transfer pricing solution that enables institutions to accurately determine and
measure the profitability and contribution of various business units. .
Kalypto/IFRS product is complaint with IAS 32, IAS 39, IFRS 7 and IFRS9 and is also configurable to
IFRS 15.

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About CMS IT Services

As one of Indias top IT services firms, CMS IT services has support infrastructure spread across 30
branches and 220 direct support locations in India. CMS provides complete solutions to large
corporations across all sectors, including banking, insurance, retail, telecom and manufacturing. CMS
IT Services (A Blackstone Portfolio Company) provides new, cost effective and cutting edge IT
infrastructure solutions that are reliable, resilient and responsive. We have extensive experience in
managing complex IT implementation projects and integration of emerging technologies in a
dynamic environment.
CMS Managed IT Services includes high quality, end-to-end IT infrastructure solutions to costeffectively manage your IT operations efficiently. CMS' Product Support Services includes superior
technical support with access to certified skilled expertise, secure processes and innovative
technology support solutions.

Copyright 2016 CARE Kalypto Risk Technologies and CMS IT Services