- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Indian Accounting Standards (Ind AS)
What to study?
For Prelims and Mains: Ind AS- features, significance and need.
Context: The Reserve Bank of India (RBI) has deferred the implementation of new accounting rules, Indian Accounting Standards (Ind AS) for banks till further notice. This is the second extension provided by the RBI. Earlier in April 2018, RBI had postponed the implementation of Ind AS by the banks by one year.
The new rules — based on the IFRS9 standards created in the aftermath of the financial crisis — were supposed to kick in at the start of the new fiscal year that starts on April 1, after being delayed last year. According to Fitch Ratings’ local unit, India’s state-run lenders would have had to increase provisions by as much as 1.1 trillion rupees ($16 billion) in the fiscal first quarter ending June 30 if the rules had gone ahead.
That would have forced public sector lenders to raise “substantial” amounts of extra capital, beyond the estimated 1.9 trillion rupee infusion already committed by the government.
What is it?
Ind AS or Indian Accounting Standards govern the accounting and recording of financial transactions as well as the presentation of statements such as profit and loss account and balance sheet of a company. Ind AS has been evolved as a compromise formula that tries to harmonise Indian accounting rules with the IFRS.
- The implementation of IndAS for public sector banks requires an amendment to the Banking Regulation Act. The schedule in BR Act relating to financial statement disclosures needs to be changed to the IndAS format.
- Section 29 of the BR Act deals with the accounts and balance sheets of public sector banks. Private sector banks are covered by the Companies Act, which is based on the new accounting standards.
Sources: the hindu.