Status report on convergence of Indian Accounting Standards with

International Financial Reporting Standards (IFRS)

1. The International Financial Reporting Standards (“IFRS”) issued by the

International Accounting Standards Board (“IASB”) are increasingly being
recognised as the global financial reporting standards. Convergence with IFRS has
gained worldwide momentum in recent years. India being an important emerging
global economy, the Government of India has committed to convergence of Indian
Accounting Standards with IFRS from April 1, 2011.

2. The Ministry of Corporate Affairs, which is spearheading the plan of convergence in

India, has set up a High Powered Core Group comprising various stakeholders,
including SEBI, for convergence with IFRS by 2011. The Core Group is supported
by two sub-groups, headed by Shri Y.H. Malegam, Chairman, National Advisory
Committee on Accounting Standards and Shri Mohandas Pai, Director, Infosys and
Member, SEBI Board, respectively.

3. After detailed deliberations on the various implementation challenges, especially

those related to legal and accounting framework, transitional issues, and sector
specific concerns, the following roadmap for convergence with IFRS has been
finalised by the Core Group:
Phase Date Applicable for
Phase I 1st April i. Companies which are part of NSE – Nifty 50
2011 ii. Companies which are part of BSE – Sensex 30
iii. Companies whose shares or other securities are listed
on stock exchanges outside India
iv. Companies whether listed or unlisted, whose net worth
exceeds Rs. 1,000 crores, as at March 31, 2009.
Phase 1st April Companies, whether listed or unlisted, whose net worth
II 2013 exceeds Rs. 500 crores but does not exceed Rs. 1,000
crores, as at March 31, 2009.
Phase 1st April Listed companies which have a net worth of Rs. 500 crores
III 2014 or less.
IFRSs would not a. Unlisted companies which have a net worth of Rs. 500
be applicable for crores or less and whose shares or other securities are
not listed on stock exchanges outside India.
b. SMEs

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 The roadmap for convergence with IFRS in respect of insurance companies,
banking companies and non-banking finance companies is as follows:
Category of Company Applicable Date
st
1. Insurance Companies 1 April, 2012
2. Banking Companies
(i) All scheduled commercial banks and those urban 1st April, 2013
co-operative banks (“UCBs”) which have a net
worth in excess of Rs. 300 crores.
(ii) UCBs which have a net worth in excess of Rs. 1st April, 2014
200 crores but not exceeding Rs. 300 crores
(iii) UCBs which have a net worth not exceeding Rs. IFRS not applicable,
200 crores and Regional Rural banks (RRBs) may adopt voluntarily.
3. Non-Banking Financial Companies (“NBFCs”)
(i) All NBFCs which are part of NSE-Nifty 50, BSE- 1st April, 2013
Sensex 30, and have a net worth in excess of Rs.
1,000 crore 1st April, 2014
(ii) All listed NBFCs and those unlisted NBFCs which
do not fall in the above category and which have
a net worth in excess of Rs. 500 crore IFRS not applicable,
(iii) Unlisted NBFCs which have a net worth of Rs. may adopt voluntarily.
500 crores or less

4. SEBI has been pro-actively involved in the process of convergence of Indian

Accounting Standards with IFRS. As a step towards encouraging convergence with
IFRS, listed entities having subsidiaries have been allowed an option to submit
consolidated accounts as per IFRS. They will, however, continue to file stand alone
financials as per Indian GAAP.

5. One of the challenges for successful convergence with IFRS is to ensure that along
with the availability of trained professionals who would help organisations in the
process of convergence, there is adequate awareness and education amongst
investors and analysts in order to understand and interpret the financial statements
prepared in accordance with IFRS. While the Institute of Chartered Accountants of
India is taking care of the need to train professionals, at the behest of SEBI, NISM
has, in collaboration with Deloitte, designed an IFRS training programme on
weekends to train and educate analysts and users of financial statements.

6. SEBI has also been facilitating interaction with the IASB through meetings,
periodically. In one such meeting, the representatives of IASB had expressed their

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 concern with regard to lack of response to IFRS exposure drafts from India. In view
of the same and in order to have a greater engagement with the IASB in the
standard setting and review process, SEBI has set up a group under the
chairmanship of Shri Y.H. Malegam with representation from RBI, ICAI, accounting
and auditing firms, and industry to discuss and submit comments on the exposure
drafts issued by the IASB in an objective and streamlined manner. Since formation
in February 2010, the group has had four meetings and has provided comments to
IASB on the following exposure drafts:
a. Management Commentary (proposed new IFRS)
b. Financial Instruments: Amortised Cost and Impairment (IFRS 9)
c. Conceptual Framework for Financial Reporting
d. Fair Value Option for Financial Liabilities (proposed new IFRS replacing IAS
39)

7. The memorandum is placed for information of the Board.

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