Date: 2022-05-19Category: Not ApplicableState: Union GovernmentCountry: India
Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions, 2021 - Reporting of reverse repos with Reserve Bank on the bank’s balance sheet
Executive Summary:
This document clarifies the presentation of reverse repo transactions on banks' balance sheets, updating the Reserve Bank of India Financial Statements Presentation and Disclosures Directions, 2021. It specifies the classification of reverse repos based on tenor and counterparty. Additionally, it includes editorial corrections and updates to the directions, applicable to all commercial banks.
Key Points / Main Content:
Reverse Repo Classification:
* All reverse repos with the Reserve Bank, including those under the Liquidity Adjustment Facility, must be presented under sub-item ii "In Other Accounts" of item II "Balances with Reserve Bank of India" under Schedule 6 "Cash and balances with Reserve Bank of India".
* Reverse repos with banks and other institutions with original tenors up to and inclusive of 14 days must be classified under item ii "Money at call and short notice" under Schedule 7 "Balances with banks and money at call and short notice".
* Reverse repos with banks and other institutions with original tenors exceeding 14 days must be classified under Schedule 9 "Advances" under the following heads:
* A.ii Cash credits, overdrafts and loans repayable on demand
* B.i Secured by tangible assets
* C.I.iii Banks / Others as applicable
Editorial Corrections:
* Section 171,111bii and 56 of the Banking Regulation Act, 1949 has been updated to Section 171,112bii and 56 of the Banking Regulation Act, 1949.
* Advances secured by tangible assets includes advances against book debts
Circular Repeals:
* The following circulars have been added to the list of circulars repealed at Annexure V:
* UBD.BPD.PCB.Cir.709.50.00200304 dated August 5, 2003.
* UBD.BPD.PCB.Cir.No.2812.05.001200506 dated January 24, 2006.
* Paragraphs 2a and 4 to 17 of circular dated February 25, 2003, have been repealed and specified in Annexure V.
* Paragraphs 1, 2 and 3 of circular dated May 30, 2014, have been repealed and specified in Annexure V.
Impact Analysis:
Commercial Banks:
* Impact: Banks must adjust their balance sheet presentation to comply with the new classification guidelines for reverse repo transactions and incorporate the editorial corrections.
* Action Required: Banks must update their reporting procedures to reflect the new classifications and ensure accurate financial statement presentation in accordance with the updated Reserve Bank of India Financial Statements Presentation and Disclosures Directions, 2021.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system.
Reserve Bank of India Financial Statements Presentation and Disclosures Directions, 2021: A set of guidelines issued by the Reserve Bank of India regarding the presentation and disclosure of financial statements by banks.
Liquidity Adjustment Facility: A tool used by the Reserve Bank of India to manage liquidity in the banking system.
Banking Regulation Act, 1949: An act to consolidate and amend the law relating to banking companies.
Mumbai, Maharashtra: City in India where the Central Office of the Department of Regulation, Reserve Bank of India is located.
Usha Janakiraman: Chief General Manager at Reserve Bank of India, signatory of the circular.
Department of Regulation, Central Office: A department within the Reserve Bank of India.
Reserve Fund: A fund banks are required to transfer a percentage of their profit to, as per the Banking Regulation Act, 1949.
भारतीय �रज़व� ब�क
_________________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2022-23/55
DOR.ACC.REC.No.37/21.04.018/2022-23 May 19, 2022
Dear Sir/ Madam,
Reserve Bank of India (Financial Statements - Presentation and Disclosures)
Directions, 2021 - Reporting of reverse repos with Reserve Bank on the bank’s
balance sheet
Please refer to the ‘Notes and Instructions for Compilation’ given in Part A of Annexure II
to the Reserve Bank of India (Financial Statements - Presentation and Disclosures)
Directions, 2021, regarding the reporting of reverse repo transactions by the banks on
their balance sheet.
2. In order to bring more clarity on the presentation of reverse repo on the balance sheet,
it has now been decided as under:
(a) All type of reverse repos with the Reserve Bank including those under Liquidity
Adjustment Facility shall be presented under sub-item (ii) ‘In Other Accounts’ of
item (II) ‘Balances with Reserve Bank of India’ under Schedule 6 ‘Cash and
balances with Reserve Bank of India’.
(b) Reverse repos with banks and other institutions having original tenors up to and
inclusive of 14 days shall be classified under item (ii) ‘Money at call and short
notice’ under Schedule 7 ‘Balances with banks and money at call and short
notice’.
(c) Reverse repos with banks and other institutions having original tenors more than
14 days shall be classified under Schedule 9 – ‘Advances’ under the following
heads:
i. A.(ii) ‘Cash credits, overdrafts and loans repayable on demand’
ii. B.(i) ‘Secured by tangible assets’
िविनयमन िवभाग,क��ीय कायार्लय, 12 व� और 13 व� मंिजल, क��ीय कायार्लय भवन, शहीद भगत �संह माग,र्फोटर्,मुंबई-400001
दरू भाष: 022-22601000 फैक्स: 022-22705691 ई-मेल: cgmicdor@rbi.org.in
____________________________________________________________________________________________________________________________
Department of 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: cgmicdor@rbi.org.in
�हदं ी आसान ह ै इसका �योग बढ़ाइएiii. C.(I).(iii) Banks (iv) ‘Others’ (as the case may be)
3. In addition, certain sections in the said Directions are being updated for editorial
corrections as given in the Annex.
Applicability
4. This circular is applicable to all commercial banks. The Reserve Bank of India
(Financial Statements - Presentation and Disclosures) Directions, 2021, stands updated
to reflect these changes.
Yours faithfully,
-sd-
(Usha Janakiraman)
Chief General Manager
2Annex
Annex 1: Other changes in the Reserve Bank of India (Financial Statements - Presentation
and Disclosures) Directions, 2021
Paragraph
Sr.
in the Existing Paragraph Revised Paragraph
No.
existing MD
1 17 In terms of sections In terms of sections
17(1),11(1)(b)(ii) and 56 of the 17(1),11(2)(b)(ii) and 56 of the
Banking Regulation Act, 1949 Banking Regulation Act, 1949 banks
banks are required to transfer, are required to transfer, out of the
out of the balance of profit as balance of profit as disclosed in the
disclosed in the profit and loss profit and loss account, a sum
account, a sum equivalent to equivalent to not less than 20 per
not less than 20 per cent of cent of such profit to Reserve
such profit to Reserve Fund……
Fund……
2 Annexure II The Bank shall specifically The Bank shall specify that
indicate that advances secured advances secured by tangible
by tangible assets includes assets includes advances against
advances against book debts book debts.
as shown below:
“B(i) Secured by tangible
assets *
(* includes advances against
Book Debt: ₹…. , (previous
year: ₹….))”
3 Annexure V - Following circulars have been
added to the list of circulars
repealed at Annexure V:
5Paragraph
Sr.
in the Existing Paragraph Revised Paragraph
No.
existing MD
i. UBD.BPD.PCB.Cir.7/09.50.0
0/2003-04 dated August 5,
2003.
ii. UBD.BPD.PCB.Cir.No.28/12.
05.001/2005-06 dated
January 24, 2006.
4 Annexure V At Sr. No. 43 Paragraphs 2(a) and 4 to 17 of
circular dated February 25, 2003,
which have been repealed have
been specified clearly in the
Annexure V.
5 Annexure V At Sr. No. 97 Paragraphs 1, 2 and 3 of circular
dated May 30, 2014, which have
been repealed have been specified
clearly in the Annexure V.
2