RBI Notifications

Ind AS (Indian Accounting Standard)

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Mains Paper 3: Economy | Mobilization of resources

From the UPSC perspective, the following things are important:

Prelims level: Ind AS

Mains level:  Accounting Standards of RBI


News

  • The Reserve Bank of India (RBI) has deferred the implementation of the new accounting norms, Ind AS, indefinitely, as necessary amendments to the relevant law are yet to be made.
  • The move will bring huge relief to the banks which are yet to recognise stressed assets and make necessary provisions as that would require higher capital.

Ind AS

  • Indian Accounting Standard is the Accounting standard adopted by companies in India and issued under the supervision of Accounting Standards Board (ASB) which was constituted as a body in the year 1977.
  • ASB is a committee under Institute of Chartered Accountants of India (ICAI) which consists of representatives from government department, academicians, other professional bodies viz. ICAI, representatives from ASSOCHAM, CII, FICCI, etc.
  • Ind AS governs 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.

Why IndAS?

  • For long, there has been a heated debate about Indian companies moving to the globally accepted International Financial Reporting Standards (IFRS) for their accounts.
  • But firms have resisted this shift, stating that this will lead too many changes in the capture and reporting of their numbers.
  • Ind AS has been evolved as a compromise formula that tries to harmonize Indian accounting rules with the IFRS.

Causes for delay

  • The implementation of IndAS for public sector banks requires an amendment to the Banking Regulation Act, 1949.
  • The schedule in Banking Regulation Act relating to financial statement disclosures needs to be changed to the IndAS format.
  • The other thing is the balance sheet format, for which some changes in the Act are required.
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