Scheduled Commercial Banks (SCBs) excluding Regional Rural Banks (RRBs) were initially required to implement Indian Accounting Standards (Ind AS) from 1 April 2018
Scheduled Commercial Banks (SCBs) excluding Regional Rural Banks (RRBs) were initially required to implement Indian Accounting Standards (Ind AS) from 1 April 2018. However, RBI vide a press release dated 5 April 2018, deferred the implementation of Ind AS by one year i.e. 2019-20 would have been the first year of Ind AS with 2018-19 as the comparative year.
The implementation of Ind AS by banks required certain legislative changes in the format of financial statements to comply with disclosures required by Ind AS. The change in format requires an amendment to the third schedule of the Banking Regulation Act, 1949 to make it compatible with accounts under Ind AS.
The RBI through a notification dated 22 March 2019, has further deferred the Ind AS implementation till further notice.
This is due to the fact that the amendments recommended by RBI are still under consideration of the Government of India, therefore, RBI has taken a decision to defer the applicability of Ind AS till further notice.
The deferment of Ind AS is expected to provide relief to several banks, thus providing them with time to prepare for implementation of Ind AS. However, the delayed adoption would impact the comparability of financial statements of banks in India with their global counter parts.
The deferment may pose various operational and business challenges for a few banks which are a subsidiary or an associate of an entity that is preparing Ind AS financial statements as per the Ind AS road map or they have invested in subsidiaries and associates that are following Ind AS road map. Therefore, the group would need to maintain parallel sets of accounts, get them audited/reviewed and provide reconciliations for transactions that warrant different accounting treatment under the two accounting standards.
To access the text of the RBI notification, please click here.
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