**Policy Summary: RBI/2018-19/157 - Disclosure of Divergence in Asset Classification and Provisioning**
This circular, DBR.BP.BC.No.3221.04.018/2018-19, issued by the Reserve Bank of India (RBI) on April 1, 2019, addresses the disclosure requirements for commercial banks (excluding Regional Rural Banks) regarding divergences in asset classification and provisioning as identified by the RBI. The circular modifies earlier instructions issued on April 18, 2017 (DBR.BP.BC.No.63/21.04.018/2016-17).
The key change stipulates that banks are now required to disclose divergences in the "Notes to Accounts" to the Financial Statements only if *either* of the following conditions is met:
a) The additional provisioning for Non-Performing Assets (NPAs) assessed by the RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period.
b) The additional Gross NPAs identified by the RBI exceed 15% of the published incremental Gross NPAs for the reference period.
The circular clarifies that this revision is intended to ensure that only *material* divergences are disclosed, addressing a concern where banks with low or negative net profit after tax were previously required to disclose even small divergences. All other instructions outlined in the April 18, 2017 circular remain unchanged.
For further information, contact the Department of Banking Regulation, Central Office, 12th and 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001. Telephone: 022-2260 1000; Fax: 022-2270 5691; Email: cgmicdbr@rbi.org.in. The circular was issued by Saurav Sinha, Chief General Manager-in-Charge.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also referred to as RBI.
Commercial Banks: Refers to all commercial banks excluding Regional Rural Banks
Regional Rural Banks: Banks operating at a regional level in India.
DBR.BP.BC.No.63/21.04.018/2016-17: RBI Circular regarding disclosures by banks where divergences from prudential norms on income recognition, asset classification and provisioning exceed certain thresholds.
Non-Performing Assets: NPAs; Loans or advances where principal or interest payments are overdue for a specified period.
Gross Non-Performing Assets: The total value of non-performing assets before deducting any provisions.
Mumbai, Maharashtra: Location of Central Office Building, Reserve Bank of India
Saurav Sinha: Chief General Manager-in-Charge, Department of Banking Regulation, Reserve Bank of India
RBI/2018-19/157
DBR.BP.BC.No.32/21.04.018/2018-19 April 1, 2019
All Commercial Banks
(Excluding Regional Rural Banks)
Madam / Dear Sir,
Disclosure in the "Notes to Accounts" to the Financial Statements - Divergence in
the asset classification and provisioning
Please refer to our circular DBR.BP.BC.No.63/21.04.018/2016-17 dated April 18, 2017,
on the captioned subject, requiring disclosures by banks where divergences from
prudential norms on income recognition, asset classification and provisioning exceed
certain thresholds.
2. It is observed that some banks, on account of low or negative net profit after tax, are
required to disclose divergences even where the additional provisioning assessed by
RBI is small, which is contrary to the regulatory intent that only material divergences
should be disclosed. Therefore, it has been decided that henceforth, banks should
disclose divergences, if either or both of the following conditions are satisfied:
(a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the
reported profit before provisions and contingencies for the reference period, and
(b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published
incremental Gross NPAs for the reference period.
ब��कंग �व�नयमन �वभाग,क�द्र�य कायार्लय, 12 वीं और 13 वीं मंिजल, क�द्र�य कायार्लय भवन, शह�द भगत �सहं माग,र्फोटर्,मुंबई-400001
दरू भाष: 022-22601000 फैक्स: 022-22705691 ई-मेल: cgmicdbr@rbi.org.in
_______________________________________________________________________________________________________________________________________
Department of Banking Regulation, Central Office, 12th and 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai- 400 001
Tel: 022- 2260 1000 Fax: 022-2270 5691 email: cgmicdbr@rbi.org.in
�हदं � आसान है इसका प्रयोग बढ़ाइए3. All other instructions of our aforementioned circular dated April 18, 2017 would
remain unchanged.
Yours faithfully,
(Saurav Sinha)
Chief General Manager-in-Charge
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