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RBI seeks more time on segment reporting

Rajalakshmi Menon

Some banks are understood to have told the RBI that such an accounting principle would prove to be an additional burden for banks as they already have a lot of financial reporting to make to the RBI itself.

MUMBAI, Jan. 3

THE Reserve Bank of India has asked the Securities and Exchange Board of India (SEBI) to give banks more time to comply with quarterly segment reporting, which has been made mandatory for companies from the quarter ended December 31.

The RBI move follows representations made by several listed banks asking for more time, as they were facing difficulties in collecting the information required for segment reporting.

Quarterly segment reporting for listed entities comes into effect from the quarter ended December 31, 2001.

Some banks are understood to have told the RBI that such an accounting principle would prove to be an additional burden for banks as they already have a lot of financial reporting to make to the RBI itself.

Said one senior bank official, ``Unlike listed companies which only have to report their trading and profit and loss accounts and their balance sheets to the Stock Exchange and the Registrar of Companies, banks have to regularly report various aspects of financial reporting such as credit reporting, NPA reporting, deposit reporting, etc, to the RBI.''

In the absence of proper guidelines on how segment reporting should be done, banks did not have a clear idea on how to go about it, said a bank official.

``There should be clearly defined broad parameters. Since we have no broad guidelines to follow, there is a lot of confusion on what we should look upon as our business mix.''

The Accounting Standards Committee of SEBI had recommended that quarterly segment reporting should be part of quarterly disclosures and companies had to furnish segment-wise revenue, results and capital employed in the quarterly financial results with effect from the quarter ending on or after September 30, 2001.

However, after some companies expressed difficulties in complying with the quarterly segment reporting for the quarter ended September 30, 2001, and sought more time to set up adequate systems for the purpose, SEBI had decided to make the segment reporting requirement voluntary for the quarter ended September 30, 2001.

Segment reporting has been defined as the primary segment format (business or geographical) that is determined based on the entity's predominant source of business risks or returns and identified by reference to the entity's management and internal financial reporting structure.

A segment must be separately reported where most of its sales are to external customers and its sales, profit or assets are 10 per cent or more of consolidated totals.

The principle disclosure requirements for the primary segment are revenue and result, total assets and liabilities, capital expenditure, depreciation or amortisation and other significant non-cash expenses and share of result and net assets of investments accounted for under equity method.

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