Balance Sheet Disclosure :
5.04 The Third Schedule to the Banking Regulation Act, 1949 requires fixed assets to be classified into two categories in the balance sheet, viz., Premises and Other Fixed Assets. Though not specifically mentioned under the Banking Regulation Act, 1949, the assets taken on lease and intangible assets should be shown separately for proper classification and disclosure and also to comply withbthe requirements of the Accounting Standards (ASs) issued by the Institute of Chartered Accountants of India (ICAI).
5.05 As per the Notes and Instructions for compilation of balance sheet, issued by the RBI, premises wholly or partly owned by the banking company for the purpose of business including residential premises should be shown under the head, ‘Premises’. Furniture and fixtures, motor vehicles, office equipments, computers and all other fixed assets except premises should be shown under the head ‘Other Fixed Assets’.
5.06 The original cost of fixed assets as on 31st March of the preceding year, additions thereto and deductions therefrom during the year, and total depreciation written off to date are to be disclosed in the financial statements. The Notes and Instructions for Compilation of Balance Sheet, issued by the RBI, require that where sums have been written-off on reduction of capital or revaluation of assets, every balance sheet after the first balance sheet subsequent to the reduction or revaluation should show the revised figures for a period of five years with the date and amount of revision made.
5.07 No rates of depreciation on fixed assets have been prescribed by the Banking Regulation Act, 1949. The provisions of the Schedule II to the Companies Act, 2013, should, therefore, be kept in mind in this respect especially in so far as the banking companies are concerned. Banking Regulation Act, 1949 requires that the auditor should examine whether the rates of depreciation are appropriate in the context of the expected useful lives of the respective fixed assets. In respect of computers and data processing equipments, RBI has directed that depreciation should be provided over three year period. With respect to fixed assets held at foreign offices/branches, depreciation policy should be consistent with that followed by the bank as a whole and to the extent not contradictory with the local laws and regulations. Further, as per note 4 of Schedule II of the Companies Act, 2013, useful life specified in Part C of the Schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately, in other words component accounting with respect to fixed assets would be mandatory effective from financial year 2015-16 onwards.
An immovable property acquired by the bank in satisfaction of debts due should be included under the head ‘fixed assets’, if it is held by the bank for its own use.
The Third Schedule to the Banking Regulation Act, 1949, does not specifically deal with disclosure of land. Land is generally shown under the heading ‘premises’.