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RBI issues guidelines on accounting standards

April 30, 2004 20:10 IST

The Reserve Bank of India on Friday issued guidelines on accounting standards to be followed by banks for discontinuing operations and impaired assets.

Merger or closure of branches of banks by transferring assets or liabilities to other branches of the same bank may not be deemed as a discontinuing operation and hence the accounting standards would not be applicable for such cases, RBI said in a notification on Friday.

Disclosures would be required under the accounting standards only when discontinuing of the operation has resulted in shedding of liability and realisation of the assets by the bank or decision to discontinue an operation which will have the above effect has been finalised by the bank and is substantial in its entirety.

Referring to the accounting standards on impairment of assets, RBI said it would not apply to investments, inventories and financial assets such as loans and advances and may generally be applicable to banks in so far as it relates to fixed assets.

These two standards are effective from the accounting period beginning April 1, 2004.

The standards pertaining to intangible assets were in operations since April 2003.

RBI said it is essential that both banks and the Statutory Central Auditors adopt the guidelines. Whenever specific difference in opinion arises among auditors, the Statutory Central Auditors would take a final view.

Persisting difference, if any, could be sorted out in prior consultation with RBI, if necessary, the apex bank added.


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