Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Top Headlines »
Open DEMAT Account in 24 hrs
 Delhi HC Rules GST Registration Cannot Be Cancelled Retrospectively Without a Clear Show Cause Notice (SCN)
 Belated income tax return AY 2026-27: How to file, late filing charges and what you may lose
 Major Financial Changes from August 1, 2026: ITR Deadline, RBI MPC Meeting, Tatkal Ticket Rules & More
 Government proposes to ease tax relief conditions for offshore funds
 TallyPrime Connected Banking: Automating Banking and Accounting
 ITR Filing Deadline 2026: Is July 31 the Last Date to File Your Income Tax Return? Latest Official Update
 ITR filing deadline nears: How to file income tax return online on e-filing portal - quick 15-step guide
 Will the ITR Filing Deadline Be Extended Beyond July 31 for FY 2025-26? Here's the Latest Update for Taxpayers
 Income Tax Refund Delayed for AY 2026-27? 5 Common Reasons Your Refund May Be Stuck and How to Fix It
 ITR Filing 2026: FM Nirmala Sitharaman Asks Tax Officials to Let Honest Taxpayers Correct Genuine Mistakes
 Will Your FCNR Deposit Stay Tax-Free After Returning to India? Tax Rules Explained for NRIs

Banks told to clarify about investments in subsidiaries
May, 23rd 2008

RBI wants lenders to spell out nature of money parked in arms.
 
In a move to encourage banks to follow accounting standards instead of expecting guidelines from the regulator, the Reserve Bank of India (RBI) has asked bank boards to clearly spell out if an investment in a subsidiary, associate company or joint venture is temporary in nature or otherwise.

In a notification issued today, the banking regulator has clarified that the move is to make sure that investments that are not temporary are included in the consolidated financial statement.

The Institute of Chartered Accountants of India's (ICAI) Accounting Standards (AS) 21, 23 and 27 prescribe the norms for accounting of investments in subsidiaries, associates and joint ventures. These standards also specifically state the circumstances under which subsidiaries, associates or joint ventures can be excluded from consolidation, said RBI.

The exclusion from consolidation is permitted when the investment is held exclusively with a view to its subsequent disposal in the near future (within the next 12 months).

A public sector bank executive associated with making financial statement said these guidelines are not expected to have any immediate implication for making financial statements.

Most of the banks make such disclosure. If no specific reference is made about the short-term nature of investment, it is understood that the investment has been made in the normal course of business for the long term, he added.

Another banker said gradually RBI is sensitising banks to use accounting standards and let auditors take a call on the treatment of the investment decision. The habit of expecting the regulator to issue guidelines should reduce over a period.

"The intention with regard to the disposal of the relevant investment should be considered at the time of acquisition of the investment," said RBI.

The regulator made it clear that absence of record of intent by a board or at the time of making investments will mean that RBI will factor in the investment for purpose of consolidation of accounts.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2026 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting