The government’s decision to give some leeway to the banks and non-banking financial services on the switch over to the International Financial Reporting Standards (IFRS) is pragmatic, analysts t
old.
As per the new schedule for IFRS convergence, banks and NBFCs will need to adopt the system only by 2013. It was widely anticipated that banks would have to switch to the new accounting standards by 2011.
A corporate affairs ministry official said the government wanted to give more time to the banks so that they are able to prepare the requisite software accordingly.
Partner at Ernst & Young and head of its IFRS Practice in India, Dolphy D’Sousa, said though the decision was the right one as banks would have more time to comply to the global standards. However, the primary reason for the extension was because International Accounting Standards Board (IASB) was not prepared with the standards on the financial instruments. “If IASB had prepared the standards then there would not have been a delay,” he said.
The new schedule for IFRS convergence was decided in a meeting convened between officials of the corporate affairs ministry, Sebi, RBI and ICAI among other stakeholders. As per the decisions reached at the end of the meeting, insurance companies would converge only by April 2012. ICAI president Amarjit Chopra also welcomed the decision to extend the timeline.
Urban cooperative banks having a net worth between Rs 200 crore and 300 crore would convert their opening balance sheets from April 1, 2014, in compliance with the first set of Accounting Standards. As per the new schedule, insurance companies would have to converge their accounting practices with IFRS by April 1 2012.
Listed companies on NSE and BSE with a networth higher than Rs 500 crore will have to submit IFRS-compliant financial statements on April 1, 2011.
