Introduction:

Despite the volatility in Annualised Par Yields on Government Securities (G-Sec)/Discount Rates due to the pandemic, rates have increased in Q3 of FY 2021-2022 compared to the past few months.

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Comments & Insights:

• G-sec rates are showing an increasing trend on account of the economy and businesses having gained some momentum while steadily converging to normalcy
• Only the rate for the tenure of 11 years as on 31-12-2021 has decreased when compared to 31-03-2021 Rates.
• For tenures showing increasing 31st December 2021 Gsec rates when compared to 31st March 2021 rates, an Actuarial Gain due to change in Financial Assumptions will be seen if all other Assumptions remain the same as the comparative valuation as on 31st March 2021.
• The G-sec rates have increased in the December quarter compared to the September quarter. However, with cases exponentially rising around the globe due to the Omicron variant, it would be interesting to see if the G-sec rates continue to show this upward trend.

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Some Important Links:

Indian Accounting Standard 19 - https://indasaccess.icai.org/download/2019/asb0719/272/272asb-cias-2019-20-vol2-24.pdf

Accounting Standard 15 (R) - https://www.mca.gov.in/Ministry/notification/pdf/AS_15.pdf

Accumulating Compensated Absences Actuarial Valuation considerations for 2021 - http://www.kapandit.com/assets/newsletter/Accumulating_Compensated_Absences_Actuarial_Valuation_Considerations_for_2021.pdf

Interest Rate Updates: -September 2021 - https://www.ka-pandit.com/assets/newsletter/interest-rates-updates-september-2021.pdf

June 2021 - https://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-June-2021.pdf

March 2021 - https://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-March-2021.pdf

December 2020 - https://www.ka-pandit.com/assets/newsletter/Interest-Rates-Updates-December-2020.pdf