ICAN addresses problems related to NFRS; Commercial Banks set to convene AGM

After the problems of the commercial banks regarding the newly applied NFRS system being addressed by the Institution of Chartered Accountants of Nepal (ICAN), the banks have finally found way to declare dividend and convene AGM for the FY 2074/75.

The main problem for the commercial banks was mainly due to the subject related to loss management. While preparing financial report using NFRS, the amount for loss management would be comparatively less than when the financial report is prepared using direction as per Rastra Bank.

Due to this, the banks had reported two different profit figures. And it was not addressed on which profit the dividends were to be declared.

As per the reports, 5 banks have already sent their annual reports for approval to Nepal Rastra Bank. Reports suggest that Sanima, Everest, Citizens, NIC Asia and Standard Chartered Bank have sent their financial report for approval.

As per the previous method of reporting, the banks had to maintain 5 different levels of loan loss provision even in the pass loan (loans which are overdue by a period of 1 month). But as per NFRS, there is no need to maintain provision for the pass loan. Due to these, the banks had to report two different profit figures.

Now, ICAN has stated that the banks will have to consider the higher of the provision for loss from either of the two methods of reporting.