Refer to our Circular DBOD No. BP.BC.

57/21.04.018/86 dated April 23 1996 advising banks to include their assessment of capital adequacy ratio in the notes on accounts attached to the balance sheet, so as to enable the statutory auditors to carry out the audit of capital adequacy ratio and authenticate the CRAR. It has since been decided that banks should make the following additional disclosures in the `notes on account' to the balance sheet for the year ended 31 March, 1997.

(i) Percentage of share holding of the government of India in the nationalised banks.

(ii) Percentage of net non-performing assets to net advances

(iii) The amount of provisions made towards NPA, towards depreciation in the value of investments and provisions towards income tax during the year (these provisions along with other provisions and contingencies would tally with the aggregate of the amount held under `provisions and contingencies' in the profit and loss account).

2. At present, the amount of subordinated debt raised as Tier-II capital is not separately shown in the balance sheet or in any of the schedules annexed to the balance sheet. Banks may suitably indicate the amount of subordinated debt raised as Tier-II capital by way of explanatory notes/remarkes in the balance sheet as well as in Schedule 3 relating to `other liabilities and provisions'.

3. In Schedule 8, pertaining to investments, the value of investments in India and outside India under each of the categories specified in the schedule is shown on net basis after adjusting for provisions towards depreciation. Banks may now indicate in Schedule 8, the gross value of investments in India and arrive at the net value of investments in India and outside India, the total of which will be carried to the balance sheet.

The gross value of investments and provisions need not, however, be shown against each of the categories specified in the schedule. The break-up of net value of investments in India and outside India (gross value of investments less provision) under each of the specified category need only be shown.

4. Write back of excess provision towards depreciation on investments.In para 3 of our circular BP. BC.30/21: 04: 048/97 dated April 9, 1997, banks were advised to take excess provision towards depreciation in investments held by them to profit and loss account under the head `expenditure-provision and contingencies' as a credit item and to transfer an equivalent amount to `capital reserve account'.

It is clarified in this connection that the write back of the excess provision and credit thereof to `capital reserve account' should be accounted for in such a manner that the net profit for the year does not get inflated.

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