The Securities and Exchange Board of India vide notification dated 31st October 2019, has mandated banks to disclose the divergence and provisioning in the asset classification within 24 hours of the receipt of the Reserve Banks Final Risk Assessment Report. The information is treated as both material and price sensitive. The disclosures must be made in any or both of the following cases:
a) the additional provisioning for NPAs assessed by RBI exceeds 10 percent of the reported profit before provisions and contingencies for the reference period, and
b) the additional gross NPAs identified by RBI exceed 15 percent of the published incremental Gross NPAs for the reference period.
The SEBI (Prohibition of Insider Trading) Regulations, 2015 mandates prompt disclosure of unpublished price sensitive information that would impact price discovery.
Earlier RBI in its notification dated 18th April 2017, mandated banks to disclose certain cases of divergence in the asset classification and provisioning in the Notes to Accounts in the ensuing Annual Financial Statements. Accordingly SEBI had also specified the same to all banks having listed specified securities. The format for reporting the same is provided in the notification and all stock exchanges are directed to intimate their listed banks to comply with the notification.
In order to bring more transparency in terms of NPA disclosures, SEBI had issued a circular in 2017 asking all listed companies to disclose any loan defaults within 24 hours of the event. Some of the leading banks opposed the circular, therefore the circular is withdrawn.
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