RBI defers Ind-AS implementation

MUMBAI: In a big breather for lenders, the Reserve Bank of India on Thursday deferred the implementation of two key regulatory policies, reflecting its hesitation in raising the burden on banks. While the regulator deferred the execution of the Indian Accounting Standards (Ind-AS) by a year, countercyclical buffer-related provisioning requirements have also been postponed for the time being.

Ind AS is a global accounting practice that lenders are mandated to adopt that may lead to initial credit losses. The practice is on a par with the International Financial Reporting Standard (IFRS) 9. Indian banks were required to comply with it from April 2018. “In our assessment, some of the banks are still not prepared to implement Ind-AS. So, we thought that we should defer this by one year by when the preparedness and the amendments to the schedule (of the Banking Regulation Act) would take place,” said NS Vishwanathan, deputy governor, RBI.

Ind-AS was to be implemented from this year and as a part of the preparedness the RBI had been asking banks to submit half-yearly balance sheets based on the Ind-AS format.


“The format of the financial statements as prescribed in the Banking Regulation Act is not amenable to reporting financial statements under Ind-AS. Therefore, we have requested the government to amend the schedule and that is under consideration,” he added.

“The provisioning requirements under IFRS 9 would be higher than what you see today because we derive numbers on incurred losses rather than expected losses,” a banker said. “There will be an incremental provisioning requirement which will result in higher capital necessity or banks capital ratios will go down because of increased level of provisioning.”