explain 90 day rebuttable presumption ifrs 9

​The 90-day rebuttable presumption under IFRS 9 is a guideline related to the assessment of credit impairment. It is an important part of the Expected Credit Loss (ECL) model introduced by IFRS 9, which requires financial institutions to make more forward-looking provisions for potential loan losses.

Under IFRS 9, financial assets (like loans) are assessed for impairment based on changes in their credit risk since initial recognition. This assessment categorizes financial assets into one of three stages:

1. **Stage 1**: Assets that have not experienced a significant increase in credit risk since initial recognition are in this stage. They are subject to a 12-month ECL assessment.

2. **Stage 2**: Assets that have experienced a significant increase in credit risk but are not credit-impaired are moved to this stage. The ECL is calculated over the lifetime of the asset.

3. **Stage 3**: Assets that are credit-impaired are in this stage. Lifetime ECLs are recognized.

The 90-day rebuttable presumption specifically relates to the determination of whether a financial asset is credit-impaired (Stage 3). The presumption is that when a borrower is more than 90 days overdue on a financial obligation, the asset is considered credit-impaired and should be moved to Stage 3. This presumption is based on the premise that such a duration of overdue payments is indicative of a significant deterioration in credit quality.

However, this presumption can be rebutted if the entity has reasonable and supportable information that demonstrates that the credit risk has not significantly increased despite being past due by more than 90 days. For instance, there could be situations where the delay in payment is due to factors that do not reflect a higher risk of default, such as administrative or processing delays.

It's important for entities to use judgment and consider all relevant and available information, including historical data, current conditions, and forecasts of future economic conditions, to assess whether the presumption is appropriate in each specific case. The 90-day rebuttable presumption provides a practical threshold for credit impairment assessment but does not override the need for a careful, comprehensive analysis of the borrower's credit risk.