Half yearly-Quarterly Review of Accounts of Public Sector Banks

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ପ୍ରକାଶିତ ତାରିଖ ଜୁନ 05, 2003

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Half yearly-Quarterly Review of Accounts of Public Sector Banks

DBS.ARS.No.BC.17/08.91.001/2002-03

June 5, 2003

All Public Sector Banks

Dear Sir/Madam,

Half yearly/Quarterly Review of Accounts of Public Sector Banks

Please refer to our circulars DBS.ARS.No.BC.13/08.91.001/2000-01 dated May 17, 2001 and DBS.ARS.No.BC.4/08.91.001/2001-02 dated October 25, 2001 forwarding therewith detailed guidelines to banks for carrying out half yearly review of accounts with effect from the half year ended September 2001. On a review of the system, it has been decided to modify the existing guidelines to the following extent:

(i) Item 4 D in the existing format given in Annexure I to our above letter may be amended to read as under:

D. Provisions and contingencies
-- of which provisions for non-performing assets.

(ii) Following additional items under the 'Head Analytical Ratios' (item No. 7) may also be added to the above format.

7(iv)(a) Amount of gross non-performing assets
(b)Amount of net non performing assets
(c)% of gross NPAs
(d)% of net NPAs

(v) Return of assets (annualized)
A revised format of Annexure I incorporating the above changes is enclosed. You may, therefore, arrange to prepare the review in the revised format as enclosed, effective from the next review. There is no change in the format of the review report given in Annexure II of the above circular.

(iii) As per the existing guidelines at least 50% of advances outstanding as on 30 September are required to be covered during half yearly review. With a view to getting more meaningful results of the review, it has been decided that while calculating 50% of outstanding advances, figures of asset recovery branches and outstanding food credit may be excluded. Further, during the course of such review it may be ensured that 50% NPAs as on September 30 are also covered.

(iv) In the case of public sector banks having overseas branches, 1/3rd thereof (by rotation) be covered for review and the same may be got done through audit firms operating in the countries where such branches are functioning.

(v) At present no additional remuneration is paid to Chartered Accountant firms undertaking concurrent audit of branches for utilization of their services for half yearly review. It has been decided that banks concerned may pay a reasonable token remuneration per branch, effective from the half yearly review to be carried out for the half year ending 30 September 2003. The quantum of fees may be determined in consultation with the Audit Committee of the Board taking in to account the work load involved and the time taken by the auditors / audit firms for the purpose.

2. Quarterly Review

(i) SEBI, by an amendment to clause 41 of the Listing Agreement has made it mandatory, effective from the quarter ending on June 30, 2003, for all listed companies (including commercial banks) to get their quarterly results subjected to "limited review" by the auditors of the company (or by a Chartered Accountant in the case of public sector undertakings) and a copy of Review Report is required to be submitted to the Stock Exchange within two months after the close of the quarter. It has therefore been decided that instructions issued by us for half yearly review will, mutatis mutandis, apply to quarterly review also. Such quarterly review will he required to be carried out by listed banks alone. The formats given in Annexure I (including the changes effected through this circular) and Annexure II (format revised vide our circular DBS.ARS.No.BC.4/08.91.001/2001-02 dated October 25, 2001) forwarded to you earlier under cover of our above circular dated May 17, 2001 may be used for the purpose of quarterly review also.

(ii) As the panel of statutory auditors for the relevant year is not likely to be ready by 30 June, every year, the banks requiring to undertake such quarterly review for the quarter ended 30 June may utilize the services of their statutory central auditors who had audited their accounts of the previous year. The fees payable for such review may be fixed at 25% of the annual statutory audit fee. Concurrent auditors assisting the review may also be paid a reasonable token fee as in the case of half yearly review. A copy each of the review report may be submitted to Central Office and the concerned Regional Office of the Department of Baking Supervision on completion of the review.

3. Please acknowledge receipt.

Yours faithfully,

Sd/-

(R. M. Thakkar)
General Manager