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Banks shall submit Proforma Ind AS Financial Statements, for the half year ended September 30, 2016 latest by November 30, 2016 to RBI.
Banks shall be
guided by the Ind ASs notified by the Ministry of Corporate Affairs. Banks
shall also refer to the Report of the Working Group on “Implementation of Ind
AS by Banks in India” placed on the RBI website on October 20, 2015.
The Proforma Ind
AS Financial Statements shall include the following:-
(a)
Balance
Sheet including Statement of Changes in Equity (Annex I & II).
(b)
Profit
and Loss Account (Annex III).
Banks may refer
to Annex V for the broad application guidance on the major line items/sub-line
items in the financial statements.
To begin with,
banks which are not in a position to submit both standalone and consolidated
proforma Ind AS financial statements for the half year ended September 30, 2016
are permitted to submit only standalone financial statements. However, banks
shall submit both proforma Ind AS standalone and consolidated financial
statements in the subsequent periods.
Banks shall
disclose significant accounting policies including:
(i)
financial
assets and liabilities, including use of fair value option in designating
financial assets or financial liabilities at Fair Value Through Profit or Loss
(FVTPL) upon initial recognition.
(ii)
impairment
of financial assets, with the following details:
•
Methodology
for computation of expected credit losses (ECL).
•
Level
of segmentation in the portfolio used.
•
Criteria
used for determination of movement from Stage 1 (12 month ECL) to Stage 2 and
Stage 3 (lifetime ECL).
•
The
method used to compute lifetime ECL.
•
The
manner in which the forward looking information has been incorporated in the
ECL estimates- the information provided should include both discussion of the
judgment required and how it is applied in determining the allowance.
•
The
treatment for non-fund based facilities.
•
The
methodology for computation of ECL for revolving credit facilities.
•
The
areas where the bank intends to refine work on in this ECL estimate and the
work plan / timeline to achieve it.
•
The
impact of movement from the current approach to the ECL approach-reconciliation
of the stock of provisions under the current reporting requirements with the
opening Ind AS 109 allowance. A comparison of the impairment allowance under
ECL for the half-year ended September 30, 2016 with the corresponding
provisions under the extant Prudential norms on IRACP norms shall also be
disclosed.
Banks
may note that Ind AS 109 is not specific in terms of the approach to be
followed when measuring expected credit losses. The Reserve Bank expects banks
to adopt sound expected credit loss methodologies commensurate with the size,
complexity, and risk profile specific to individual banks.
(iii)
derivatives
and hedge accounting.
(iv)
derecognition
of financial assets and financial liabilities.
(v)
employee
benefits.
(vi)
offsetting
financial instruments.
(vii) income taxes.
(viii)
significant
areas of estimation uncertainty , critical judgements and assumptions in
applying accounting policies.
(ix) Approach on
exemptions under Ind AS 101 First Time Adoption of Indian Accounting
Standards.
8.
For
the purpose of preparation of proforma Ind AS financial statements for the half
year ending September 30, 2016, the notional date of transition to Ind ASs
shall be the beginning of business as on April 01, 2016.
9. The Proforma Ind
ASs Financial Statements shall also include:
(i)
(a)
reconciliation of equity reported in accordance with the existing financial
reporting requirements as at April 1, 2016 to its equity in accordance with Ind
ASs as on the same date.
(b)
reconciliation
of equity reported in accordance with the existing financial reporting
requirements as at September 30, 2016 to its equity in accordance with Ind ASs
as on the same date.
(ii)
Reconciliation
of the total comprehensive income in accordance with IND AS for the half year
ended September 30, 2016 with the profit or loss under the existing financial
reporting requirements.
10.
The
reconciliations shall be given in sufficient detail explaining how the
transition affected the reported Balance Sheet and financial performance. The
detail shall enable RBI to understand the significant adjustments to equity
that will impact regulatory capital. The proforma Ind AS financial statements need
not be audited.
Guidance for preparation of proforma Ind
AS financial statements
1.
Banks
are advised to follow the application guidance given in the Report of the
Working Group on Implementation of Ind AS.
2.
Banks
may note that the application guidance provides broad guidance on the major
line items/sub-line items in the financial statements. Banks may also note that
it is not always necessary or possible to define a term /title/line item
specifically and exclusively. Banks are also advised to refer to relevant
Indian accounting standards and their framework, as well as the prevailing
industry practices, where relevant, to interpret the meaning thereof.
3.
In
order to promote uniformity, banks may present the proforma Ind AS financial
statements in the following order:
(i)
Balance
Sheet including Statement of Changes in Equity.
(ii) Profit and Loss
Account.
(iii)
Notes
to Account.
4.
The
figures appearing in the financial statements shall be rounded off to the
nearest million rupees.
5.
Net
realised and unrealised gains and losses on financial assets/liabilities at
fair value through profit or loss are included in the head ‘Net Gain/loss on
fair value changes’ in Note 21. However, contractual interest income
and expense on financial instruments (other than derivatives) held at
/designated at fair value through profit or loss may be recognised under
interest income and interest expense, respectively. The effect of the same
should be suitably adjusted while determining fair value gains and losses. The
subhead ‘Others’ in Note 21 would include reclassification from OCI.
Based on RBI circular dated 23/06/2016/ For further
clarification please refer www.rbi.org.in
………..Poppy
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