The Ministry of Corporate Affairs (MCA) in India has published new guidelines for accounting standards in the country in a bid to increase transparency, compliance and clarity in the financial sector.
Improved International Financial Reporting Standards (IFRSs) will now apply to India's banks, insurers and other non-bank finance companies, as these parties were originally excluded from guidelines released in January 2015.
Following the introduction of the new roadmap for Indian accounting standards, banks and insurance firms will now be required to prepare financial statements in advance of the start of each fiscal year.
With big data becoming ever more important for organisations and governments across the world, having access to a wide range of information on banks is vital for Indian authorities to make better-informed strategic decisions about the country's financial market as a whole.
However, this new rule will not apply to regional rural banks in India or cooperative banks based in urban parts of the country for the foreseeable future. Instead, they will continue to comply with the latest accounting standards applicable to them.
For non-banking organisations operating in the financial sector with an annual revenue 500 rupees or more, accounting statements will need to be prepared ahead of the start of the 2018 fiscal year for the first time, while those with smaller revenues will be required to submit their first statements before April 1st 2019. This will not apply to those with a net worth below 250 rupees for the time being - they will continue to operate under current accounting standards.
The introduction of this new accounting roadmap in India will bring the country in line with financial standards that have already been adopted around much of the rest of the world, subsequently enabling India to better compete with its international banking counterparts.