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[SEBI] Disclosure Of Divergence In Asset Classification & Provisioning By Banks

Securities/Banking Laws (Country: India)

SEBI vide circular no. CIR/CFD/CMD/80/2017 dated July 18, 2017 to all banks which have listed specified securities and all recognized stock exchanges, has prescribed some provisions regarding Disclosure of divergence in the asset classification and provisioning by banks. The contents of the circular is as under:

1. Reserve Bank of India (RBI), vide its Notification No. RBI/2016-17/283; DBR.BP.BC.No.63/21.04.018/2016-17 dated April 18, 2017, requires disclosures by banks in a prescribed format in certain cases of divergence in the asset classification and provisioning. The Notification requires the disclosures to be made in the Notes to Accounts in the ensuing Annual Financial Statements published immediately following communication of such divergence by RBI to the bank.

2. Accordingly, all banks which have listed specified securities shall comply with the following:

a) The banks shall disclose to the stock exchanges divergences in the asset classification and provisioning wherever:
(i) the additional provisioning requirements assessed by RBI exceed 15 percent of the published net profits after tax for the reference period; and/or
(ii) the additional Gross NPAs identified by RBI exceed 15 percent of the published incremental Gross NPAs for the reference period.
b) The disclosures shall be made in the format specified in the Annex to the aforesaid RBI’s notification. This format is also placed as Annexure to this circular for reference. 
c) The disclosures shall be placed as an Annexure to the annual financial results filed with the stock exchanges in accordance with clause (d) of sub-regulation (3) of Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Such disclosures shall be made along with the annual financial results filed immediately following communication of such divergence by RBI to the bank.
3. The Stock Exchanges are advised to bring the provisions of this circular to the notice of banks which have listed specified securities and to disseminate the same on their websites.

4. This circular is issued under Regulation 101 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Annexure

Divergence in Asset Classification and Provisioning for NPAs

SEBI - Divergence in Asset Classification and Provisioning for NPAs

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