A software standard that automates filing of reports on the Internet could mark a significant change for corporate governance and financial management by ensuring transparency.
While banks are already on the path to introducing the XBRL standard, there are chances that company accounts to be filed with the Ministry of Corporate Affairs (MCA) could also adopt the format.
The Reserve Bank of India has asked all banks – public, private and foreign —to introduce by 2011 the extensible business reporting language (XBRL) while filing all their financial statements.
XBRL is an electronic format for communication of business and financial data that helps increase accuracy and
India is among 150 nations which will adopt International Financial Reporting Standards (IFRS) by 2011. “We have asked our banks to implement XBRL while filing their returns as this form of reporting would bring in more transparency,” a senior official at RBI told Hindustan Times. He said all banks are adequately prepared for this.
With the use of XBRL, any errors and gaps in data could be easily addressed.
At present, most banks have already switched to the XBRL format for the Basel II system under which banks are required to submit data on capital structure to the RBI. Capital adequacy norms are used to efficiently measure and manage risks in lending.
The MCA is also keen to introduce this form of filing returns for its MCA 21 portal that involves data on 900,000 companies, say sources familiar with the development.
A source the Securities and Exchange Board of India (SEBI) and the Institute of Chartered Accountants of India (ICAI) are also actively looking into adopting the standard.