Implementation of Indian Accounting Standards deferred by RBI
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.
RBI has reasoned that since the legislative amendments recommended by the RBI are under consideration of the government it has been decided to defer the implementation of Ind AS till further notice.
Indian Accounting Standards
Indian Accounting Standards (Ind AS) is a set of accounting norms developed by Indian authorities, which converge with the International Financial Reporting Standards (IFRS). 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.
This delay in the implementation of Ind AS will give banks more time to prepare for the expected credit-loss model. Fitch Ratings estimated that 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. This huge capital requirement 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.