{"id":24247,"date":"2019-09-07T18:22:05","date_gmt":"2019-09-07T12:52:05","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=24247"},"modified":"2020-06-26T14:24:59","modified_gmt":"2020-06-26T08:54:59","slug":"ind-as-guidelines-for-preparation-of-financial-statement-for-nbfc","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/ind-as-guidelines-for-preparation-of-financial-statement-for-nbfc\/","title":{"rendered":"IND Accounting Standard Guidelines for NBFC for the Preparation of Financial Statement"},"content":{"rendered":"<p class=\"has-drop-cap\">The Non-Banking Financial Companies (NBFCs) adopted the Indian <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Accounting&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Accounting is the language of business, serving as the backbone of financial management and decision-making. It involves the systematic recording, analysis, and reporting of financial(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/accounting\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Accounting<\/a> Standard (Ind AS) for the first time with the beginning of the accounting year 2018. Where, NBFCs are required to <strong><a href=\"https:\/\/enterslice.com\/implementation-of-ind-as\" target=\"_blank\" rel=\"noreferrer noopener\">adopt Ind AS implementation road map<\/a><\/strong> issued by the Ministry of Corporate Affairs (MCA) on 30 March 2016 in a phased manner from accounting periods beginning on or after 1 April 2018. Let&rsquo;s discuss more about <strong><a href=\"https:\/\/enterslice.com\/learning\/guidelines-for-ind-as-implementation-by-nbfcs-arcs-issued-by-rbi\/\" target=\"_blank\" rel=\"noreferrer noopener\">IND AS guidelines for <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;NBFC&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Non-Banking Financial Companies (NBFC) operate similarly to banks but do not possess the legal status of a bank. Registered under the Companies Act 2013 and governed by the RBI Act&amp;#039;s section(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/nbfc\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>NBFC<\/a> <\/a><\/strong>for the prepration of financial statement;<\/p>\n\n\n\n<div class=\"shadow1\"><strong>NOTE:<\/strong> As per IND AS comprise 391 accounting standards that are largely converged with International Financial Reporting Standards (IFRS) which have been issued by the MCA.<\/div>\n\n\n\n<p>Additionally, to maintain convergence with IFRS, each year MCA issues annual amendments to Ind AS by incorporating amendments which are issued by International Accounting Standards Board (IASB). The implementation of amendments is expected to have a pervasive impact on the financial services sector, not only in terms of accounting changes but also on several aspects of their business. The implementation of these financial instrument standards is expected to affect almost all line-items in the financial statements of the NBFCs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background and Roadmap of IND AS Guidelines for NBFC<\/strong><\/h2>\n\n\n\n<p>The initial plan of MCA was to implement Ind AS for banks, insurance companies and NBFCs from 1 April 2018 onwards. Earlier in this year, Ind AS implementation date has been deferred for banks by one year for insurance entities by two years. Certain NBFCs are required to <strong><a href=\"https:\/\/enterslice.com\/learning\/applicability-of-indian-accounting-standards\/\" target=\"_blank\" rel=\"noreferrer noopener\">implement Ind AS <\/a><\/strong>in phase I from 1 April 2018 and others in phase II from 1 April 2019, as mentioned below &ndash; <\/p>\n\n\n\n<p>The <strong>MCA&rsquo;s notification<\/strong> covers all NBFCs as defined in clause (f) of Section 45-I of the Reserve Bank of India Act, 1934, and includes <\/p>\n\n\n\n<ul><li>Housing Finance Companies (HFCs), <\/li><li>Merchant Banking Companies, <\/li><li>Micro Finance Companies, <\/li><li>Mutual Benefit Companies, <\/li><li>Venture Capital Fund Companies, <\/li><li>A stockbroker or Sub-Broker Companies, <\/li><li>Nidhi Companies, Chit Companies, <\/li><li>Securitization and Reconstruction Companies, <\/li><li>Mortgage Guarantee Companies, <\/li><li>Pension Fund Companies, <\/li><li>Asset Management Companies and <\/li><li>Core Investment Companies. <\/li><\/ul>\n\n\n\n<p>NBFCs would be\nrequired to prepare both consolidated and separate financial statements based\non Ind AS in two phases. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Phase I, for accounting periods beginning from 1 April 2018 onwards, with comparatives for the periods ending on or after 31 March 2018<\/h2>\n\n\n\n<ul><li>NBFCs having a net\nworth of INR500 crore or more, and <\/li><li>In case of NBFCs holding,\nsubsidiary, joint venture or associate companies, other than those companies\nalready covered under the road map for companies issued by MCA in February\n2015. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Phase II, for accounting periods beginning from 1 April 2019 onwards with comparatives for the periods ending on or after 31 March 2019 &ndash;<\/h2>\n\n\n\n<ul><li>When the Equity\nand\/or debt securities of NBFCs are listed or are in the process of listing on\nany stock exchange in India or outside India and having a net worth of less\nthan INR500 crore.<\/li><li>NBFCs that are\nunlisted companies, having a net worth of INR250 crore or more but less than\nINR500 crore. <\/li><li>In case of NBFCs Holding,\nsubsidiary, joint venture or associate companies of the above class of\ncompanies, other than those already covered under the road map for companies\nissued by MCA in February 2015. <\/li><\/ul>\n\n\n\n<p>When NBFCs net\nworth is below INR 250 crore and is not covered in Phase I or II will continue\nto comply with the existing accounting standards in the Indian GAAP. In that\ncase, the net worth is to be calculated following the separate financial\nstatements of the NBFC as on 31 March 2016 or the first audited financial\nstatements ending after that date.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/enterslice.com\/nbfc-software\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" loading=\"lazy\" width=\"730\" height=\"90\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/1.jpg\" alt=\"NBFC Software\" class=\"wp-image-22702\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/1.jpg 730w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/1-300x37.jpg 300w\" sizes=\"(max-width: 730px) 100vw, 730px\"\/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">What are the general instructions for the preparation of financial statements as per AS Guidelines for NBFC?<\/h2>\n\n\n\n<p>NBFCs are required to comply with the Indian Accounting Standards general instructions for preparation of <strong><a href=\"https:\/\/enterslice.com\/learning\/nbfc-prudential-norms-nbfc-compliances\/\">financial statements of NBFCs<\/a><\/strong>&ndash;<\/p>\n\n\n\n<ul><li>Every Non-Banking Financial Company to which Indian Accounting Standards apply shall prepare its financial statements following this Schedule or with such modification as may be required under certain circumstances.<\/li><\/ul>\n\n\n\n<div class=\"shadow1\"><strong>NOTE:<\/strong> Here NBFCs refers to Non-Banking Financial company as defined in the Companies (Indian Accounting Standards) (<a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Amendment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An &amp;quot;amendment&amp;quot; refers to the formal change or correction of a legal document, often involving additions, variations, or deletions to address irregularities or clarify points in an agreement.(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/amendment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Amendment<\/a>) Rules, 2016&#65279;<\/div>\n\n\n\n<ul><li>The relevant\nregulator issueAct, Regulations, Guidelines or Circulars as per the\nrequirements from time to time including Indian Accounting Standards (Ind AS)\nas applicable to the NBFCs and if in case it requires any change in the <\/li><li>Treatment or\ndisclosure including addition, amendment, substitution or deletion in the head\nor sub-head or any changes inter se, in the financial statements or statements,\nshall be made under this Schedule shall stand modified accordingly.<\/li><\/ul>\n\n\n\n<div class=\"shadow1\"><strong>NOTE:<\/strong> Except the option of presenting assets and liabilities in accordance with current, non-current classification as provided by relevant IND Accounting Standard<\/div>\n\n\n\n<ul><li>Unless required to be disclosed on the face of the Financial Statements, Additional disclosures specified in the Indian Accounting Standards shall be made in the Notes or by way of additional statement or statements.<\/li><li>The narrative description and information in addition to the notes shall be presented in the financial statements where the description required about the items that do not qualify for recognition in the statement.<\/li><li>The total income of the NBFC appearing in the Financial statement shall be rounded off as mentioned below-<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Total\nIncome Rounding Off<\/strong><\/h2>\n\n\n\n<p>Less than one hundred crore rupees to the nearest hundreds, thousands, lakhs or millions, or decimals thereof.<\/p>\n\n\n\n<p>One hundred crore rupees or more to the nearest, lakhs, millions or crores, or decimals thereof<\/p>\n\n\n\n<ul><li>All &lsquo;material&rsquo; items shall be disclosed in the Financial Statements and materiality depends on the size or nature of the item or a combination of both, to be judged in the particular circumstances.<\/li><li>Considering the operations performed by the NBFCs, NBFCs while preparing financial statements may change the order of presentation of line items on the face of financial statements or order of line items within the schedules in order of liquidity.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p>The impact of IND\nAccounting Standard is that there is an increase in revenue from operations,\nfinance cost and employee cost under Ind AS in comparison to the erstwhile\nIndian GAAP while there is a fall in profit after tax. Further, the\nimplementation of these financial instrument standards is expected to affect\nalmost all line-items in the financial statements of the NBFCs.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/applicability-of-indian-accounting-standards\/\" target=\"_blank\" rel=\"noopener noreferrer\">Applicability of Indian Accounting Standards<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Non-Banking Financial Companies (NBFCs) adopted the Indian Accounting Standard (Ind AS) for the first time with the beginning of the accounting year 2018. Where, NBFCs are required to adopt Ind AS implementation road map issued by the Ministry of Corporate Affairs (MCA) on 30 March 2016 in a phased manner from accounting periods beginning [&hellip;]<\/p>\n","protected":false},"author":25,"featured_media":24254,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6],"tags":[2725,2726],"acf":{"service_id":"56"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>IND AS Guidelines for NBFC for the Preparation of Financial Statement<\/title>\n<meta name=\"description\" content=\"AS Guidelines for NBFC - NBFCs are required to comply with the IND AS general instructions for preparation of financial statements of NBFCs.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/ind-as-guidelines-for-preparation-of-financial-statement-for-nbfc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"IND AS Guidelines for NBFC for the Preparation of Financial Statement\" \/>\n<meta property=\"og:description\" content=\"AS Guidelines for NBFC - NBFCs are required to comply with the IND AS general instructions for preparation of financial statements of NBFCs.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/ind-as-guidelines-for-preparation-of-financial-statement-for-nbfc\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-07T12:52:05+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-06-26T08:54:59+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/IND-AS-Guidelines-for-the-Preparation-of-Financial-Statement-for-NBFCs.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/81216.jpg","authorDescription":"Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. Also, she has practical experience of almost 1.5 years in Legal compliance and secretarial work.","postViews":498,"readingTime":4,"nextPost":{"id":24289,"slug":"effective-strategies-for-raising-fund-capital-in-quick-time"},"prevPost":{"id":24154,"slug":"provisions-of-cotpa"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/IND-AS-Guidelines-for-the-Preparation-of-Financial-Statement-for-NBFCs.jpg","postTerms":"NBFC","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/24247"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=24247"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/24247\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/24254"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=24247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=24247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=24247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}