The issue relates to the MCA notifying the Companies (Indian Accounting Standards (Ind AS)) Rules, 2015 stipulating adoption and applicability of Ind AS in a phased manner beginning from accounting period 2016-17.
Non-banking financial companies (NBFCs) are facing a dilemma on account of the ministry of corporate affairs (MCA) temporarily stopping the process of filing of their financial statements due to changes being made to Form AoC-4, which is used by these entities to file their performance with the Registrar of Companies (RoC).
In an update on its website earlier this week, the MCA said the government has made amendments to Schedule III of the Companies Act, 2013. Division III has been inserted for financial statements of an NBFC whose statements are drawn up in compliance with Ind AS. Changes to the AoC-4 Non-XBRL form is necessitated by this insertion and are under development. The revised form for such class of companies would be made available for filing purposes soon.
The issue relates to the MCA notifying the Companies (Indian Accounting Standards (Ind AS)) Rules, 2015 stipulating adoption and applicability of Ind AS in a phased manner beginning from accounting period 2016-17. Here, banks, NBFCs and insurance companies with a net worth of, or more than, `500 crore have to adopt Ind AS from April 1, 2018. Also, NBFCs having net a worth of `250 crore or more, but less than `500 crore, are required to adopt Ind AS from April 1, 2017.
These companies are required to hold an AGM within six months from the close of the financial year and thereafter submit their financial statements within 30 days with the RoC.
Nangia Advisors’ (Andersen Global) director (regulatory) Sumit Naib said this has unnecessarily put NBFCs in a fix as to whether they should file form AOC4 within stipulated timelines or continue to wait for revised forms, as and when these are issued. Additionally, NBFCs which have already filed AoC 4 in its current version are not sure if they should file the return twice in the new version as and when it gets introduced.
“Given MCA’s previous track record, it is unlikely that the compliance requirement would kick in on from a retrospective basis. A general clarification from MCA will help a great deal in settling the above ambiguities,” he added.
AMRG & Associates CEO Gaurav Mohan too expressed similar views. He said, “Ind AS-compliant NBFC companies who have already convened an annual general meeting are looking at non-compliance on account of non-availability of updated form AoC-04 Non-XBRL. This patently establishes that one arm of the ministry is not on talking terms with other arms, leading to inconvenience for corporates lowering the ease of doing business.”
According to the Reserve Bank of India, there are more than 20,000 NBFCs registered in India as of July 2019.