The Reserve Bank of India through circular dated August 30, 2021 has issued a Reserve Bank of India (Financial Statements – Presentation and Disclosures) Directions, 2021. Banks shall take prior approval from the Reserve Bank of India before any appropriation is made from the Statutory Reserve or any other reserve. Banks are further advised that:
- All expenses including provisions and write-offs recognized in a period, whether mandatory or prudential, shall be reflected in the profit and loss account for the period as an ‘above the line’ item (i.e. before arriving at the net profit/loss for the year);
- Draw down from reserves, with the prior approval of Reserve Bank of India, shall be effected only ‘below the line’ (i.e. after arriving at the net profit / loss for the year); and
- Suitable disclosures shall be made of such draw down in the ‘Notes on Accounts’ to the Balance Sheet.
