There is relief in store for Indian banks. The deadline to implement the International Financial Reporting Standards (IFRS) looks set to be extended to April 2012 from April 2011 for banking companies. It is learnt that banks may get more time to implement IFRS. The deadline for Indian companies is April 2011. However, the deadline for banks may be extended to April 2012.
YH Malegam, Chairman, the National Advisory Committee on Accounting Standard (NACAS), said, “We will be announcing a roadmap. For banks, it will not be April 1, 2011. There will be no concerns becasue the banking sector is anyways a part of Bank of International Settlements. All the pronouncements by the Bank of International Settlements are translated by the Reserve Bank and are made applicable in India.”
It is not just in India but globally too there were concerns on fair value accounting post the Lehman crisis. Banks and financial institutions want the international accounting standard to be amended.
IAS 39 is an international accounting standard dealing with financial instruments like derivatives. The new IAS 39 or IFRS is to be implemented by 2010 end or early 2011.
Banks and financial institutions require atleast 15-18 months to adhere to new accounting rules. The banking industry is the most affected by the adoption of IFRS.
Currently, banks follow the prudential norms of the Institute of Chartered Accountants of India (ICAI) and the Reserve Bank (RBI). IFRS is likely to impact banks with regards to derivatives, non-performing loan provisioning, and capital adequacy.
A host of technological changes are required for smooth implementation of IFRS. The emphasis will be on making huge disclosures by banks.