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7/29/2019 Disclosure in Financial Statements - Notes to Accounts
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Disclosure in Financial Statements -
Notes to Accounts
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Introduction
The users of the financial statements need information about the financial positionand performance of the bank in making economic decisions.
They are interested in its liquidity and solvency and the risks related to the assetsand liabilities recognised on its balance sheet and to its off balance sheet items.
In the interest of full and complete disclosure, some very useful information isbetter provided, or can only be provided, by notes to the financial statements.
The use of notes and supplementary information provides the means to explainand document certain items, which are either presented in the financial statementsor otherwise affect the financial position and performance of the reportingenterprise.
Recently, a lot of attention has been paid to the issue of market discipline in thebanking sector.
Market discipline, however, works only if market participants have access to timelyand reliable information, which enables them to assess banks activities and therisks inherent in these activities.
Enabling market discipline may have several benefits.
Market discipline has been given due importance under Basel II framework oncapital adequacy by recognizing it as one of its three Pillars.
Summary of Significant Accounting Policies and Notes to Accounts is shownunder Schedule 17 and Schedule 18 respectively, to maintain uniformity.
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Minimum Disclosures
Disclosures are to be shown in the Notes to
Accounts comprehensively.
Banks are required to disclose the accounting
policies adopted by them along with Notes to
Accounts in their financial statements which
includes Basis of Accounting, Transactions involving
Foreign Exchange, Investments Classification,
Valuation, etc, Advances and Provisions thereon,
Fixed Assets and Depreciation, RevenueRecognition, Employee Benefits, Provision for
Taxation, Net Profit, etc.
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Disclosure Requirements
Market discipline deals with capital adequacy, risk
exposures, risk assessment processes and key
business parameters which provide a consistent and
understandable disclosure framework that
enhances comparability.
Banks are required to comply with the AS 1 on
Disclosure of Accounting Policies issued by ICAI.
Apart from the 16 detailed prescribed schedules to
the balance sheet, banks are required to furnish the
following information in the Notes to Accounts:
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Details of Single Borrower Limit (SGL)/ Group Borrower Limit (GBL) exceeded by the bank.
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Details of Single Borrower Limit (SGL)/ Group Borrower Limit (GBL) exceeded by the bank.
Unsecured Advances
Disclosure of Penalties imposed by RBI
Accounting Standard 5 Net Profit or Loss for the period, prior period items and changes in accounting policies.
Accounting Standard 9 Revenue Recognition
Accounting Standard 15 Employee Benefits
Accounting Standard 17 Segment Reporting
Accounting Standard 18 Related Party Disclosures
Accounting Standard 21 Consolidated Financial Statements (CFS)
Accounting Standard 22 Accounting for Taxes on Income
Accounting Standard 23 Accounting for Investments in Associates in Consolidated Financial Statements
Accounting Standard 24 Discontinuing Operations
Provisions and Contingencies
Disclosure of complaints
Awards passed by the Banking Ombudsman
Disclosure of Letters of Comfort (LoCs) issued by banks
The PCR (ratio of provisioning to gross non-performing assets) should be disclosed in the Notes to Accounts tothe Balance Sheet.
Bancassurance Business
Concentration of Deposits, Advances, Exposures and NPAs
Sector-wise NPAs
Movement of NPAs Off-balance Sheet SPVs sponsored
Unamortised Pension and Gratuity Liabilities
Disclosures on Remuneration
Disclosures relating to Securitisation
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