Asset classification is the one place where a lending system either tells the truth every night or tells a comforting story once a quarter. RBI's IRAC norms are precise; the software running them often is not.
The most common failure we see in legacy systems is bucketing by calendar month. IRAC works in days past due. A loan that misses its EMI on the 3rd is SMA-0 on the 4th, not "current until month-end." Getting this right means the classification engine runs every night, against every account, on actual DPD.
Income recognised on an account that has slipped to Sub-Standard must reverse to suspense. If your P&L is still counting that interest until someone runs a report, your profitability is overstated and your auditor will find it.
Provision percentages by asset class and ageing are table-driven. The correct engine computes the provision and posts it to the right GL heads automatically, so the provisioning schedule in the notes to accounts is derived from the ledger, not typed into it.
A clean close is the byproduct of a correct nightly run, not a heroic month-end.
Accounts upgrade on sustained repayment, not on the first payment after a slip. Encode the rule; do not leave it to a manual override.
The IRAC engine in Account & Treasury grades every account nightly, reverses income to suspense on NPA, posts provisions by class and ageing, tracks upgrades on sustained performance, and generates CRILC and RBI returns from the same classification. The day-end close on 2 million loans runs in 18 minutes.
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