RPCD.CO RRB.BC.No. 70 /03.05.33/2010-11
May 16, 2011
All Regional Rural Banks (RRBs)
Enhancement in gratuity limits – Prudential Regulatory Treatment
Consequent upon the enhancement in gratuity limits following the amendment to Payment of Gratuity Act 1972, RRBs have approached us for the amortisation of the enhanced expenditure resulting therefrom.
2. The additional liability on account of enhancement in gratuity limits should be fully recognised and charged to Profit and Loss Account for the financial year 2010-11.
3. However, RRBs have expressed that it would be difficult for them to absorb the large amount involved in a single year. We have examined the issue from a regulatory perspective and it has been decided that RRBs may take the following course of action in the matter:
4. Appropriate disclosures of the accounting policy followed in this regard may be made in the ‘Notes to Accounts’ to the financial statements.
5. Please acknowledge receipt of this circular to our Regional Office concerned.
Chief General Manager
Encls: As above