DISCLOSURE REQUIREMENTS ON ADVANCES RESTRUCTURED BY BANKS AND FINANCIAL INSTITUTIONS

Notification No. RBI/2012-13/409

Date: 31-01-2013

In reference to paragraph 16 of Master Circular on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated July 2, 2012 in terms of which banks should disclose in their published Annual Balance Sheets, under “Notes on Accounts” information relating to number and amount of advances restructured, and the amount of diminution in the fair value of the restructured advances under the following categories:

i.              Standard Advances Restructured;

ii.            Sub-Standard Advances Restructured; and

iii.            Doubtful Advances Restructured.

Under each of the category above, advances restructured under CDR Mechanism, SME Debt Restructuring Mechanism and other categories of restructuring are required to be shown separately.

The Working Group (WG) constituted by RBI to Review the existing Prudential Guidelines on Restructuring of Advances had recommended that once the higher provisions and risk weights (if applicable) on restructured advances (classified as standard either abinitio or on up gradation from NPA category) revert back to the normal level on account of satisfactory performance during the prescribed period, such advances should no longer be required to be disclosed by banks as restructured accounts in the “Notes on Accounts” in their Annual Balance Sheets.

However, the provision for diminution in the fair value of restructured accounts on such restructured accounts should continue to be maintained by banks as per the existing instructions. The WG also recommended that banks may be required to disclose:

i.   Details of accounts restructured on a cumulative basis excluding the standard restructured accounts which cease to attract higher provision and risk weight (if applicable);

ii.   Provisions made on restructured accounts under various  categories; and

iii.      Details of movement of restructured accounts.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

701, Nirmal Tower,

26, Barakhamba Road,

Connaught Place, Delhi-110001

Mobile:- +91-9873082769

Website:- www.caaga.co.in