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N.S. Vageesh

CHENNAI, May 27

IT may still be a bit premature to say that banks have started baring all, but they are certainly revealing more than before.

Banks are required by statute and guidelines from the Institute of Chartered Accountants of India (ICAI) and the Reserve Bank of India (RBI), issued at periodical intervals, to provide information on a variety of operational matters in their balance sheets and annual reports.

Over the past couple of years, some new information has been disclosed every year.

For instance, during the last two years, banks have been disclosing the maturity pattern of their assets and liabilities; this year, there are some more items.

They now give details pertaining to transactions (including placement of deposits/lending/borrowing/sale or purchase of Government securities/bonds/bills, interest or dividend paid or received) with related parties (subsidiaries/joint ventures/key management personnel or relatives of key management personnel).

This is required by the terms of Accounting Standard (AS)-18 issued by the ICAI.

With regard to country risk management, banks are now required to give details of their funded exposure to various countries and classify it according to the degree of risk, the amount of exposure in relation to regulatory capital and the provision held in respect of the same.

Andhra Bank, for instance, has classified this country risk in five categories - insignificant, low, moderate, very high and restricted.

While exposure to the US figures in the insignificant risk category, exposure to Syria of around Rs 0.19 crore is classified in the high-risk category.

Bank of India, however, has just one category (insignificant) in which it places its entire country exposure of around Rs 3,799.77 crore, without mentioning the country.

If a bank's net funded exposure with respect to foreign exchange transactions with each country is below two per cent of its total assets, as at the end of the year, no provision and disclosure is required as per an RBI circular of February 19, 2003.

Only a few banks have given details about the composition of non-SLR investments.

Syndicate Bank and Bank of India provide such details (issuer-wise) with information about extent of private placement and the extent of unrated private placement.

Bank of India also provides a table on non-performing non-SLR investments in its report.

In the past, RBI has expressed concern about the quality of non-SLR investments made by commercial banks.

In terms of AS-22 and pursuant to RBI guidelines, most banks have recognised and accounted for deferred tax assets apart from deferred tax liabilities and given details of the same.

UCO Bank was an exception; it stated in Note 15 of its notes to accounts in its balance sheet: "In view of the uncertainty of adjustment of accumulated losses in terms of tax laws, no deferred tax asset is being recognised in terms of AS-22."

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