RBI asks FIs to disclose more

RBI asks FIs to disclose more
AGENCIES & EEB

MUMBAI, MAR 25: The Reserve Bank of India has notified the new norms for the financial institutions to bring in uniformity in their information disclosures and improve transparency in their transactions from fiscal 2000-01.There was considerable divergence in nature and manner of disclosures made by FIs in their published annual reports, RBI said in a communication to all India term lending and refinancing institutions. “It is desirable to bring about uniformity in disclosure practices adopted by the FIs with a view to improve the degree of transparency in their affairs,” it added.

These guidelines are minimum standards for incorporating information about non-performing assets, risks weightages and “FIs wishing to make additional disclosures are well-advised to do so”.

Under the new norms, FIs would have to disclose credit exposure as percentage to capital funds and as percentage to total assets, in respect of the largest single borrower, the largest borrower group, the 10 largest single borrowers and the 10 largest borrower groups have to be disclosed. However, the names of the borrowers/borrower groups need not be disclosed.

FIs would also have to disclose credit exposure to the five largest industrial sectors (if applicable) as percentage to total loan assets. Under the asset quality and credit concentration, FIs would be required to divulge the percentage of net NPAs to net loans and advances as also the amount and percent of net NPAs under the asset classification categories. Information on amount of provisions made during the year towards standard assets, NPAs, investments (other than those in the nature of an advance) and income tax are also required to be shown, RBI said.

FIs would have to disclose information about capital including the amount of subordinated debts raised and tier II capital. The risks weighted assets would have to be disclosed both for, on and off-balance sheet items, RBI said adding they would be also be required to give details of share holding pattern as on the date of balance sheet. On liquidity, FIs would have to present information on maturity pattern of rupee assets and liabilities and maturity pattern of foreign currency assets and liabilities in a specified format, the apex bank said.

The operating results would need to provide information on interest income, non-interest income and operating profits, all as a per centage to average working funds. To reflect the financial health and productivity, FIs would have to disclose return on average assets and net profit per employee. This disclosures would be in addition to those prescribedunder the RBI guidelines on forward rate agreements/interest rates swaps issued on July seven, 1999, it said. NPAs of ten leading financial institutions have reported a rise of 11.89 per cent, or Rs 1,929 crore, to Rs 18,146 crore during the year ended March 2000 from Rs 16,217 crore last year.