IndAS norms on early loss recognition back into play, but in different form

The central bank has also said any action by lenders with an intent to conceal the actual status of accounts or evergreen stressed accounts will be subject to stringent supervisory action

The Reserve Bank of India’s (RBI’s) move to align the definition of ‘financial difficulty’ with the guidelines issued by the Basel Committee on Banking Supervision has bought the now deferred Indian Accounting Standard (IndAS) norms on early loss recognition back into play, albeit in a different form.

The central bank has also said any action by lenders with an intent to conceal the actual status of accounts or evergreen stressed accounts, will be subject to stringent supervisory and enforcement actions as deemed appropriate.

This could include, but is not limited to, higher provisioning on such accounts and monetary penalties.

Banks are to pay