Disclosure requirements of contingent liabilities are governed by the extant accounting standard AS 29, in terms of which an entity should disclose, for each class of contingent liability, a brief description of the nature of contingent liability and where practicable, inter alia, an estimate of its financial effect. The guidelines pertaining to sale of NPAs issued from time to time have been consolidated in the Master Circular on ‘Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances’ issued vide circular DBOD.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 (paragraph 6 and 7). The provisioning requirements are based on the period for which the asset has remained non-performing and the security available. RBI would need to suitably align/withdraw the extant instructions on classification of investment portfolios as outlined in the Master Circular on Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks dated July 1, 2015. For one, you can’t have an accurate measurement of fair value unless you figure it based on what the asset is worth or what the liability would transfer for in an appropriate marketplace — in other words, its principal market. The RBI accounting treatment for IBPC with risk sharing will not be in line with Ind AS 32 offsetting requirements. Gains or losses on the termination of swaps should be recognised when the offsetting gain or loss is recognised on the designated asset or liability. RRBs are established in terms of the Regional Rural Banks Act, 1976. Any additional amount lent is an expense or a reduction of income unless it qualifies for recognition as some other type of asset. Amortised cost measurement includes the capitalisation of transaction costs that are incremental for an entity and are directly attributable to the issuance of the related liability. The issue for consideration is whether the 90-day criteria for default is acceptable and that for the purpose of consistency the RBI should define default. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Also refer application guidance under paragraph 5.6 above for. The RBI may consider withdrawing its guidelines. (ii) If classified to be measured at amortised cost The credit spread for the unrated debentures/bonds should appropriately reflect the credit risk borne by the bank. As the issuer has no obligation to deliver cash / other financial assets or to exchange financial assets/financial liabilities, the instrument would be fully equity in nature and the coupons may be characterised as distribution of profits. RBI has also specified the business segments as ‘Treasury’, ’Corporate/ Wholesale Banking’, ‘Retail Banking’ and ‘Other Banking Business’. 7.5.2 In respect of the titles of the financial statements wherein paragraph 10 of IAS 1 provides flexibility in nomenclatures, all banks reviewed used the term Balance Sheet instead of Statement of Financial Position. The Working Group also reviewed several extant RBI instructions and guidelines as well as Ind AS notified1 by the MCA, GoI to identify potential issues with regard to Ind AS implementation. Valued at spread of 25 basis points above the corresponding yield on GoI securities. However, financial instruments are not required to be externally rated to be considered to have low credit risk. due from banks. Ind AS 109 has corrected the anomaly of recognising in income statement gains/losses due to own credit risk. The Central Government, respective State Government and the Sponsor Bank hold shares in the ratio of 50%, 15% and 35% respectively. 2.4.2 Ind AS 109 allows subsequent measurement at amortised cost for debt instruments only if they satisfy both of the following conditions. At cost as defined in circular DBOD.No.BC.8/12.02.001/97-98 dated January 22, 1998 and BC.18/12.02.001/2000-2001 dated August 16, 2000. This is especially true in the case of Revolving credit facilities such as cash credit, credit cards or bank overdrafts, can have a life of many years, with balances being drawn and repaid (partly or fully) at short intervals. Whether a third party imposes the requirement to sell financial assets, or that activity is at entity’s discretion is not relevant to the analysis’. However, this would result in a lack of consistency and comparability across the banking sector with some banks on full Ind AS while others on Ind AS with a carve out for impairment provisions. If this is not the case, the test is failed and the financial asset reverts to the default classification to be measured at FVTPL. However, this threshold may be treated as indicative. Sale of assets from Amortised Cost category. All expenses other than those not included in any of the other heads like license fees, donations, subscriptions to papers, periodicals, entertainment expenses, travel expenses, etc. The following table illustrates reclassification between categories and the accounting impact: 2.7.2 Issues pertaining to reclassification and the recommendations of the Working Group are given in the table below. securities, as put out by PDAI / FIMMDA periodically. Depending upon the use of non-market observable inputs and their significance to the measurement, the measurement would be categorised as either Level 2 or Level 3. As such, no change from the current practice is envisaged. RBI has considered different treatment of such gains/losses for prudential requirements under Basel III. Recommends valuation at cost till the end of the business model test for classification under amortised cost classification different systems. 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