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RBI defers Indian Accounting Standards (Ind AS)
March 24 , 2019
1945 days
750
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- The Reserve Bank of India (RBI) has deferred the implementation of new accounting rules, Indian Accounting Standards (Ind AS) for banks till further notice.
- RBI has delayed the introduction of these tough new accounting rules for the second time.
- If these accounting standards come into effect immediately India’s state-run banks would have had to increase provisions by as much as 1.1 trillion rupees ($16 billion) in the fiscal first quarter ending June 30.
- This will be a huge burden for the banks which already struggle with large quantum of bad loans.
- The new accounting standards would require banks to make ‘provisions’ immediately when they judge that a loan is likely to default, rather than waiting for the borrower to start missing payments.
- Urban Cooperative Banks (UCBs) and Regional Rural Banks (RRBs) shall not be required to apply Ind AS and shall continue to comply with the existing Accounting Standards.
Indian Accounting Standards
- Indian Accounting Standards (Ind AS) is a new set of accounting norms which converge with the International Financial Reporting Standards (IFRS).
- IFRS 9 accounting standard was developed in the aftermath of 2008 Financial crisis to prevent collapse of banks.
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