Coming out with the Indian Accounting Standards roadmap for banking and insurance sectors, the government today said scheduled commercial banks and insurance companies...
Coming out with the Indian Accounting Standards roadmap for banking and insurance sectors, the government today said scheduled commercial banks and insurance companies would have to start implementing the new accounting norms from April 1, 2018.
Indian Accounting Standards (Ind AS), converged with the global accounting norms, would be applicable for certain class of Non Banking Financial Companies (NBFCs) from the same date.
Scheduled commercial banks, all-India term-lending refinancing institutions – Exim Bank, NABARD, NHB and SIDBI – as well as insurers/insurance companies have to prepare their financial statements as per Ind AS from April 1, 2018.
They would have to “prepare Ind AS-based financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter”, the Corporate Affairs Ministry said in a release.
It would be applicable for consolidated and individual financial statements.
“Notwithstanding the roadmap for companies, the holding, subsidiary, joint venture or associate companies of Scheduled commercial banks (excluding RRBs) would be required to prepare Ind AS-based financial statements for accounting periods beginning from April 1, 2018 onwards,” it said.
Regional Rural Banks (RRBs) and Urban Cooperative Banks (UCBs) are exempt from this roadmap. They can continue with the existing accounting standards for now.
For NBFCs, the implementation of Ind AS — that are converged with International Financial Reporting Standards (IFRS) — would be done in two phases.
Under the first phase, Ind AS would be in place from April 1, 2018 for NBFCs having net worth of at least Rs 500 crore as well as for holding, subsidiary, joint venture or associate companies of companies covered under such NBFCs.
“NBFCs whose equity and/or debt securities are listed or are in the process of listing on any stock exchange in India or outside India and having net worth less than Rs 500 crore,” would have to implement Ind AS from April 1, 2019.
This implementation date would be applicable for NBFCs that are unlisted companies, having net worth of Rs 250 crore or more but less than Rs 500 crore.
“NBFCs having net worth below Rs 250 crore and not covered under the above provisions shall continue to apply Accounting Standards specified in Annexure to Companies (Accounting Standards) Rules, 2006,” the release said.
According to the Ministry, scheduled commercial banks (excluding RRBs)/ NBFCs/ insurance companies/insurers should apply Ind AS only if they meet the specified criteria. They they should not be allowed to voluntarily adopt it.
“This, however, does not preclude an insurer/insurance company/NBFC from providing Ind AS compliant financial statement data for the purposes of preparation of consolidated financial statements by its parent/investor, as required by the parent/investor to comply with the existing requirements of law,” the release said.
In this regard, draft notification and rules would be issued by the Ministry, RBI and IRDAI in due course.
Companies with a networth of Rs 500 crore or more would have to mandatorily follow the new accounting norms that are converged with global standards from April 1, 2016.
Besides, corporates having a networth of less than Rs 500 crore but are listed or in the process of getting listed would have to compulsorily follow the new norms from April 1, 2017.