Banks are advised to set up a Steering Committee headed by an official of the rank of an Executive Director (or equivalent) comprising members from cross-functional areas of the bank to immediately initiate the implementation process, it said.
The Reserve Bank on Thursday said banks should follow accounting standard Ind AS converged with International Financial Reporting Standards (IFRS) from April 2018.
"Banks shall comply with the Indian Accounting Standards (Ind AS) for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter," RBI said in a notification.
"Ind AS shall be applicable to both standalone financial statements and consolidated financial statements. Comparatives shall mean comparative figures for the preceding accounting period. Banks shall apply Ind AS only as per the above timelines and shall not be permitted to adopt Ind AS earlier," it said. There will be an impact of new accounting norms on profit planning and budgeting, taxation, capital planning, and impact on capital adequacy, it said.
Ind AS implementation is likely to significantly impact the financial reporting systems and processes and, as such, these changes need to be planned, managed, tested and executed in advance of the implementation date, it said.
Banks are advised to set up a Steering Committee headed by an official of the rank of an Executive Director (or equivalent) comprising members from cross-functional areas of the bank to immediately initiate the implementation process, it said.
"Board shall oversee the progress of the Ind AS implementation process and report to the Board at quarterly intervals," it said.
Banks should assess the impact of the Ind AS implementation on their financial position including the adequacy of capital, taking into account the Basel III capital requirements and place quarterly progress reports to their boards, it said.
RBI also said that banks also need to be in preparedness to submit proforma Ind AS financial statements to the Reserve Bank from the half-year ended September 30, 2016, onwards. The RBI will also take steps to facilitate the implementation process.
To begin with, from April 2016, the RBI will hold periodic meetings with banks in this regard, it said. The boards of the banks should have the ultimate responsibility in determining the Ind AS direction and strategy and in overseeing the development and execution of the Ind AS implementation plan, it said.
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