What changed
Previously, banks had to disclose all restructured advances cumulatively in annual balance sheets, even those that had recovered. Now, standard restructured accounts that have met performance criteria and reverted to normal provisioning/risk weights can be excluded from disclosure. However, the provision for fair value diminution on such accounts must still be maintained.
What it means for you
This reduces the stigma on previously stressed accounts that have normalized, allowing banks to present a cleaner asset quality picture. It also aligns disclosure with actual risk, as accounts that have demonstrated sustained performance are no longer flagged as restructured. Banks must still track and disclose cumulative restructured data excluding these cured accounts, along with provisions and movement details.
What you must do
- Update annual balance sheet notes to exclude standard restructured advances that have ceased to attract higher provisions/risk weights from cumulative disclosure.
- Continue to maintain provisions for diminution in fair value on such cured restructured accounts as per existing instructions.
- Adopt the new disclosure format provided in the Annex for FY 2012-13 onwards, including cumulative restructured data (excluding cured accounts), provisions, and movement details.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Bank finance and accounting teams preparing annual disclosures, Risk management and credit monitoring departments
Which restructured accounts can we stop disclosing?
Standard restructured advances that have performed satisfactorily during the prescribed period and have reverted to normal provisioning and risk weights can be excluded from cumulative disclosure in the Notes on Accounts.
Do we still need to maintain provisions on these cured accounts?
Yes, the provision for diminution in fair value on such restructured accounts must continue to be maintained as per existing instructions, even if they are no longer disclosed as restructured.
From when is this change effective?
The revised disclosure requirements are effective from the financial year 2012-13.