Banks writes to RBI and ICAI for amortising liability
December, 08th 2010
The Reserve Bank of India (RBI) is alarmed at the pension liability of banks calculated as per 2010 data. Initial calculation done according to 2007 data showed banks will have to bear a cost of only Rs 6000 crore, reports CNBC-TV18s.
RBI is concerned at the rise in pension liability of banks in just three years. As per 2010 data, second option pension liability is roughly over Rs 20,000 crore while it was only Rs 6000 crore in 2007.
Meanwhile, banks have written to RBI and Institute of Charted Accountants of India (ICAI) for amortising liability over five years.
Hence, banks will have to reveal liability in FY11 balance sheet.
RBI had last given approval for amortisation in 1993.
ICAI has commented that RBI has to approve amortisation to banks. It suggested that RBI should prescribe an accounting treatment, only then ICAI can then give instructions to auditors.