Disclosure Requirements in Financial Statements :
Sub-sections (1) and (2) of section 29 of the Banking Regulation Act,1949 deal with form and content of financial statements of a bankingcompany. Sub-section (1) of section 29 requires every banking company toprepare a balance sheet and a profit and loss account in the forms set out inthe Third Schedule to the Banking Regulations Act, 1949 (hereinafter referredto as ‘the Act’). Form A of the Third Schedule to the Act contains the form ofbalance sheet and Form B contains the form of profit and loss account.
The disclosure requirements for disclosure in the financialstatements can be broadly classified in the following four categories:
(i) Prescribed by Reserve Bank of India.
(ii) Prescribed by Accounting Standards and other pronouncements.
(iii) Requirement emanating from Statues.
(iv) Requirement emanating from Listing Agreement.
Disclosures Prescribed by RBI: In addition to the disclosures to be made in the balance sheet and profit and loss account in pursuance of the requirements of the Third Schedule to the Act, the RBI has, vide its Master Circular no. DBR.BP.BC No. 23/21.04.018/2015-/16 dated July 1, 2015 on “Disclosure in Financial Statements – Notes to Accounts”, prescribed disclosures to be made in the Notes to Accounts in respect of certain significant aspects of the items of financial statements of banks. The Banks should, at a minimum, disclose the items listed in the circular in the ‘Notes to Accounts’. However, banks should also make more comprehensive disclosures than the minimum required under the circular if they become significant and aid in the understanding of the financial position and performance of the bank. The disclosure listed is intended only to supplement, and not to replace, other disclosure requirements under relevant legislation or accounting and financial reporting standards. Where relevant, a bank should comply with such other disclosure requirements as applicable.
Disclosures Required Under Accounting Standards: The disclosure requirements under the various notified Accounting Standards, prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and various applicable pronouncements
of the ICAI.
Requirements of Statutes: The requirements of the Companies Act, 2013 relating to the balance sheet and profit and loss account of a company, in so far as they are not inconsistent with the Banking Regulation Act, 1949 also apply to the balance sheet or profit and loss account of a banking company [sub-section (3) of section 29 of the Act]. It may be noted that this provision applies only to those banks, which have been incorporated as companies.
Requirement of Listing Agreement: Banks listed on a stock exchange have to also comply with the requirements of the Listing Agreement as amended from time to time.