The Reserve Bank of India on Thursday relaxed the requirement for banks to implement the Indian Accounting Standards (Ind AS) from April 1, 2018 by a year.
The Reserve Bank of India on Thursday relaxed the requirement for banks to implement the Indian Accounting Standards (Ind AS) from April 1, 2018 by a year. While announcing the first bi-monthly monetary policy statement for 2018-19, the RBI said, “Necessary legislative amendments — to make the format of financial statements, prescribed in the Third Schedule to Banking Regulation Act 1949, compatible with accounts under Ind AS — are under consideration of the government. In view of this, as also the level of preparedness of many banks, it has been decided to defer implementation of Ind AS by one year by when the necessary legislative changes are expected.” All scheduled commercial banks, excluding regional rural banks, were required to implement Ind AS by April 1, 2018, according to a RBI circular issued on February 11, 2016. “The deferment of Ind AS provides banks with more time to move their financial reporting processes that would have been significantly impacted due to Ind AS 109,” said Ashish Gupta, director, Grant Thornton Advisory. “Further, the banks would have more time to prepare for the potential impact on capital due to enhanced provisioning under Ind AS. However, it should be noted that Indian banks will be at a different platform of financial reporting than their global peers who have either moved, or shall move, to IFRS 9 this year. This reduces the comparability of banking performance vis-a-vis global peers,” Gupta added. The public sector bank index closed 4.9% higher, while the overall banking sector index gained 2.6%. “(The) deferment of implementation of Ind AS by one year comes as a big relief for the banks who are still trying to grapple with its implementation issues and struggling to stabilise after the impact of NPAs (non-performing assets),” said RP Marathe, the chief executive of Bank of Maharashtra.
(Inputs from Reuters)