INSUBCONTINENT EXCLUSIVE:
MUMBAI: The non-banking finance companies are planning to meet the Reserve Bank of India on the issue of implementation of Indian Accounting
Standards, popularly known as Ind AS.
RBI has deferred the implementation of Ind AS for banks by a year, while it is applicable for NBFCs
NBFCs will have to compute their first quarter result this month and it is expected to have an impact on capital due to enhanced
provisioning.
Ind AS is a global accounting practice that NBFCs are mandated to adopt, which may lead to initial credit losses
The practice is on a par with the International Financial Reporting Standard (IFRS) 9
The provisioning requirements under IFRS 9 would be higher as NBFCs will have to provide for on expected losses rather than incurred
losses.
According to the initial plan, ministry of corporate affairs was to implement Ind AS for banks, insurance companies and NBFCs from 1
In April 2018, RBI deferred the implementation of Indian Accounting Standards by one year for banks
Now, 2019-20 would be the first year of Ind AS with 2018-19 as the comparative year for banks
Finance Industry Development Council umbrella body for NBFCs
Under the Ind AS there is divergence in the way different entities report numbers
portfolio considering prepayment probability, fee income amortisation and delinquency.
Currently fee income is usually recognised up front,
while interest on all non-NPA loans is recognised on accrual basis.
