What changed
RBI expanded disclosure requirements under the Financial Statements Directions, 2021. Previously, only 'Miscellaneous Income' and 'Other Expenditure' items above 1% of total income needed note disclosure. Now, any item under 'Other Liabilities and Provisions' or 'Other Assets' exceeding 1% of total assets must also be detailed. Payments banks additionally must disclose 'Commission, Exchange and Brokerage' items above 1% of total income.
What it means for you
Banks need to enhance granularity in financial reporting, especially for large miscellaneous balance sheet items. This increases transparency for regulators and stakeholders, potentially revealing hidden concentrations or risks. Lenders must update their financial statement preparation processes to identify and disclose these thresholds accurately.
What you must do
- Review all items under Schedule 5(IV) 'Other Liabilities' and Schedule 11(VI) 'Other Assets' for those exceeding 1% of total assets.
- For payments banks, also check Schedule 14(I) 'Commission, Exchange and Brokerage' items above 1% of total income.
- Update notes to accounts for annual financial statements from March 31, 2023 onwards to include these disclosures.
- Ensure internal reporting systems can flag items crossing the 1% threshold automatically.
Who it affects
All commercial banks, Payments banks, Finance and accounting teams, Auditors and compliance officers
What is the threshold for disclosing items under 'Other Liabilities' or 'Other Assets'?
Any item under these heads that exceeds one per cent of total assets must be disclosed in the notes to accounts.
When do these new disclosure rules take effect?
They apply to annual financial statements for the year ending March 31, 2023 and onwards.
Are payments banks subject to any additional disclosure requirement?
Yes, payments banks must also disclose items under 'Commission, Exchange and Brokerage' that exceed one per cent of total income.