Abstract - Accounting is the language of business, through which an organization can communicate to its stakeholders. From a petty shop to a Multinational Company needs accounting. Even though India is a country which is rapidly moving towards globalization, is still in the process of adopting global reporting standards (i.e. IFRS). Indian banking sector considered as one of the strongest industry, where everything is standardized, but even today it practicing the traditional accounting system i.e. Indian GAAP. This paper concentrates on effects and challenges in implementation of IFRS in Indian banking sector. Adoption of global accounting standards in Indian banking system will bring more positive drastic changes, where as it has plenty of challenges also. This study elaborates how the challenges can be overcome to avail the benefits of global accounting standards. The Ministry of Corporate Affairs of India (MCA) is likely to notify all sections and rules of the new companies Act and start convergence of Indian Accounting Standards with International Financial Reporting Standards (IFRS) process immediately, which have to be implemented from April 2015 and it has developed a roadmap for the implementation of IFRS in India and this paper examine the effects of IFRS-9 “Financial Instruments” on Indian banking after the implementation of IFRS. This research study also contains the findings and suggestions based on the survey. Happy Reading :)

1. IMPLEMENTATION OF
INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRS) IN INDIAN BANKING SECTOR: EFFECTS AND
CHALLENGES
Miss. NAVERIYA BANU & Mr. RANJAN B U
Research Scholars, Mandavya Research & Development Center,
Mandavya First Grade College, Mandya .

2. INTRODUCTION
 India is a country which is rapidly moving towards globalization,
is still in the process of adopting global reporting standards (i.e.
IFRS).
 Indian banking sector considered as one of the strongest
industry, where everything is standardized, but even today it
practicing the traditional accounting system i.e. Indian GAAP.
 Adoption of global accounting standards in Indian banking
system will bring more positive drastic changes, where as it has
plenty of challenges also.
 This paper/presentation concentrates on effects and challenges
in implementation of IFRS in Indian banking sector.

3. OBJECTIVES OF THE STUDY
 To comprehend the concept and effects of International
Financial Reporting Standards (IFRS).
 To study the major challenges for International Financial
Reporting Standards (IFRS) adoption in Indian banking
sector.
 To suggest the appropriate measures for the effective
implementation of IFRS in Indian banking industry.

4. SCOPE OF THE STUDY
 The scope of the study is confined to nationalized banks
and excludes all other industries in India.
 The data collected by consulting the accountants and
bankers are belongs to banking industry in and around
Mandya district.
 Further the scope is limited to the data collected by the
accountants and bankers are 25 respondents only.
 The time covered by the study is one month.

5. STATEMENT OF THE PROBLEM
 In Indian banking industry in order to get the
advantages of IFRS adoption we have to control over
the challenges for the adoption of IFRS, in order to
control them the proper understanding of those
challenges is most important.
 Thus the study concentrates on identifying the major
challenges and understanding the effects of IFRS
adoption in Indian banking sector

6. METHODOLOGY
Quantitative research method is adopted. The data for the study
collected from both primary sources as well as secondary source:
 PRIMARY DATA:
Primary data has collected through questionnaire by consulting 25
accountants and bankers of different nationalized banks around
Mandya district.
 SECONDARY DATA:
Secondary data has collected from various books, articles, journals,
dailies, and official websites.
 The Primary and secondary data are analyzed using simple
arithmetical techniques such as percentage, tables, graphs that are
extensively used for analyzing and interpretation of the data collected.

7. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
 IFRS - stands for International Financial Reporting
Standards are high quality, understandable, enforceable
and globally accepted accounting standards issued by
IASB (International Accounting Standards Board).
 These standards are a set of international accounting
standards stating how a particular type of transaction and
other event should be reported in the financial
statements.
 The ultimate goal of issuing these standards is to achieve
a single set of high quality, common accounting
standards should be in practice around the world

8. NO. TITLE ORIGINALLY ISSUED EFFECTIVE
IFRS 1
First-time Adoption of
International Financial
Reporting Standards
2003 January 1, 2004
IFRS 2 Share-based Payment 2004 January 1, 2005
IFRS 3 Business Combinations 2004 April 1, 2004
IFRS 4 Insurance Contracts 2004 January 1, 2005
IFRS 5
Non-current Assets Held for
Sale and Discontinued
Operations
2004 January 1, 2005
IFRS 6
Exploration for and Evaluation
of Mineral Resources
2004 January 1, 2006
LIST OF EXISTING IFRS:

9. IFRS 7
Financial Instruments:
Disclosures
2005 January 1, 2007
IFRS 8 Operating Segments 2006 January 1, 2009
IFRS 9 Financial Instruments 2009 January 1, 2015
IFRS 10
Consolidated Financial
Statements
2011 January 1, 2013
IFRS 11 Joint Arrangements 2011 January 1, 2013
IFRS 12
Disclosure of Interests in Other
Entities
2011 January 1, 2013
IFRS 13 Fair Value Measurement 2011 January 1, 2013
IFRS 14 Regulatory Deferral Accounts 2014 January 1, 2016

10. IFRS CONVERGENCE PLAN
 The Ministry of Corporate Affairs of India as a part of
Government of India, in January 2010 announced a multi
phased plan for transition beginning April 1, 2011 to the
new converged accounting standards India’s attempts to
converge the IFRS which has carve outs that distinguish it
from IFRS which is known as “Ind AS”.
 The MCA has finalized “Thirty five Ind AS” in February
2011. The actual date of application of these Ind AS is yet
to be notified.

11. EFFECTS OF IFRS ADOPTION IN INDIA:
 Common basis of comparison:
Adopting a global financial reporting basis will enable the
banks to be understood in the global market place. It would
allow banks to be perceived as an international player.
 Improved access to international capital market:
Migration to IFRS will enable Indian banks to have access to
international capital market reducing the risk premium that is
added to those reporting under banking regulation act.
 Escape multiple reporting:
IFRS will eliminate the need for multiple reports and significant
adjustments for preparing consolidated financial statements or
filing financial statements in different stock exchanges.

12. MAJOR CHALLENGES FOR IFRS ADOPTION IN INDIA:
 Wide Gap:
IFRS is very much different from the present accounting policies
being followed. There are big differences expected in accounting for
financial instruments, business combinations and employee benefits.
 Inadequate Trained People on IFRS:
A large group of trained and skilled accountants and bankers are
required to Indian banks for the effective implementation of IFRS.
 Fair Value Measurement of Items in the Financial Statements:
IFRS uses fair value as a base to measure a majority of items in the
financial statements which yields a true value of a business. But the
Indian banks are preparing financial statements on historical cost
basis, and there are difficulties are there in shifting from historical
cost based of accounting to the fair value based accounting system.

13. DATAANALYSIS AND INTERPRETATION:
1. WHETHER THE ACCOUNTANTS AND BANKERS ARE COMFORTABLE WITH
THE PRESENT METHOD OF ACCOUNTING SYSTEM:
Source: primary data.
INFERENCE: From the above table and graph we can noticed
that, out of 25 respondents the entire 25(100%) respondents
are comfortable with the existing system of accounting, and no
one is uncomfortable with the present method of accounting in
India
OPTION NO. OF RESPONDANTS PERCENTAGE (%)
Yes 25 100
No. 00 000
Total. 25 100

14. 2. THE DEGREE OF AVAILABILITY OF TRAINING AND
KNOWLEDGE TO THE RESPONDENTS TOWARDS LATEST
DEVELOPMENTS IN ACCOUNTING IN THEIR ORGANISATION:
7
12
4
2
Excellent
Good
Satisfactory
Poor
INFERENCE: From the above table and graph we can observes that, out of
25 respondents, 07 (28%) of the respondents has an excellent availability of
training and knowledge on the latest developments an accounting by their
banks, while 12 (48%) respondents has Good, 04 (16%) has Satisfactory, and
02 (08%) respondents has poor availability of that training and knowledge in
their organizations.

15. 3. THE AWARENESS OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) AMONG THE RESPONDENTS:
0
2
4
6
8
10
12
14
16
18
Yes No
8
17
INFERENCE: From the above table and graph we can come to know the fact
that, out of 25 respondents, only 08 (32%) of them are aware of IFRS and 17
(68%) of the respondents are unknown of IFRS.

16. 4. WHETHER THE RESPONDENTS ARE READY TO MIGRATE
FROM INDIAN BANKING ACCOUNTING SYSTEM TO IFRS:
OPTION NO. OF
RESPONDANTS
PERCENTAGE (%)
Yes 15 60
No. 10 40
Total. 25 100
INFERENCE: From the above table and graph we can conclude that out of 25 respondents,
15(60%) of the respondents are ready to migrate from existing accounting system to global
accounting standards (IFRS), and 10 (40%) of them are not ready for the migration.

17. 5. RESPONDENTS OPINION ABOUT THE MAJOR BENEFIT
OF IFRS ADOPTION IN INDIA:
OPTION NO. OF RESPONDENTS PERCENTAGE (%)
Improvements in the efficiency
the international capital market.
03 12
Increased flow of FDI to India 04 16
Better information to investors. 00 00
Competition with foreign
companies.
05 20
Reduced burden of multiple
reporting.
10 40
Increased transparency. 03 12
Total 25 100

18. 6. ACCORDING TO THE RESPONDENTS, THE MAJOR
CHALLENGE BEHIND THE DELAY IN IFRS ADOPTION:
OPTION NO. OF RESPONDENTS PERCENTAGE (%)
Difficulties involved in the
transition process.
03 12
Fair value measurement of
assets and liabilities.
02 08
Accounting policies. 03 12
Lack of knowledge on IFRS. 07 28
Tax implications 04 16
Amendments to the existing
laws.
06 24
Total. 25 100

19. 7. RESPONDANTS RECOMMENDATION TO THEIR
ORGANISATION FOR THE EFFECTIVE IMPLIMENTATION OF IFRS:
OPTION NO. OF
RESPONDANTS
PERCENTAGE (%)
Training to the staff. 12 48
Guidance and
assistance of higher
authority.
05 20
Keep investors
informed.
00 00
All of the above. 07 28
Total. 25 100

20. SUGGESTIONS
 The study indentified that the knowledge on International
Financial Reporting Standards (IFRS) is very poor among the
respondents, though the accountants and bankers are the
pillars of the transition process it is suggested to ensure
adequate training and knowledge on IFRS, its benefits, its
implementation from now itself.
 An adequate management and government support is very
essential to the banks and other organizations for the effective
implementation of IFRS in India.
 The another key success factor for the effective IFRS
implementation is “Outsourcing”, India can import the
information related to the successful implementation of IFRS by
other countries who are the leaders in the effective
implementation of IFRS.

21.  The Government of India shall provide assistance as well as
incentives to the banks that are ready to migrate to IFRS, this
will definitely helps in the effective and early adoption of IFRS
in Indian banking sector.
 The another important suggestion is that the information given
to the various stakeholders including investors, creditors,
suppliers, customers, etc., regarding the migration from Indian
accounting Standards to IFRS in such a way that it shall not
create any confusions among them, that means it should be
reliable, relevant and on time.
 Academicians are also the part of transition process, so it is
suggested to include the IFRS as a curriculum activity
especially for the commerce students from the pre university
level itself.

22. CONCLUSION
 The adoption of IFRS in Indian banking sector will ensure
a greater credibility and faith in the international capital
market. It also helps in upgrading the status of Indian
banks in the views of investors both domestic as well as
Foreign Institutional Investors (FII).
 There can be number of challenges will enter into the
transition process, but the worth of benefits derived from
the transition will definitely overcome those challenges.
 Thus it is suggested to Indian banking sectors that the
IFRS adoption or convergence have to be came into
action as soon as possible.