This article discusses the implementation of the Nepal Financial Reporting Standards (NFRS 9) in Nepal’s banking and financial institutions. The text highlights the differences between NFRS 9 and the previous standard, NAS 39, particularly focusing on the expected credit loss (ECL) model. It then delves into the three-stage process of ECL, explaining the different stages and how each stage impacts credit quality, expected credit losses, and interest revenue recognition. The text concludes by outlining the challenges and expectations surrounding the implementation of NFRS 9 and the ECL model, including the need for BFIs to develop and implement policies and methodologies for calculating ECL and the importance of close collaboration between BFIs and regulatory authorities.

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