Reserve Bank of India has declared that more disclosure is needed from the part of banks regarding their Non Performing Assets (NPAs). The Central Bank has said that a detailed information is required regarding the market operations of banks including the list of their top 20 depositors, 20 largest borrowers , 4 largest NPAs to which the bank is exposed and also if any special purpose vehicles (SPV) are sponsored by them in this fiscal.

According to officials, RBI has taken this step to ensure that the banking industry is following best practices standard and also as a measure to increase the transparency in banking system. Further, development of banking sector is need of the hour and a check on NPAs has become very necessary as NPAs are an indicative of a large number of loan defaults that affects the profitability and net worth of banks.

The entry for this disclosure has to be in banks' balance sheets under the title ‘Notes to Accounts'.

In a communication to bank chief executives, the RBI said, "The central bank has been taking several steps from time to time to enhance transparency in operations of banks by stipulating comprehensive disclosures in tune with international best practices."

Along with providing the list of top 20 depositors, banks will also have to reveal the share of these deposits in the total deposit base.

Further, banks will have to give the list of 20 largest borrowers and also the details of exposure both credit and investment to top 20 customers.

V Ramakrishna, chief executive officer, Indian Bank's Association, said, "We are focusing on improving governance and compliance to ensure that it is good for the industry".

The new RBI norm says that banks have to report their NPAs in sectoral manner that is the sector wise distribution of exposure to NPAs. The sectors to be mentioned are agriculture and allied sector; industry (micro & small, medium, and large), services and personal loans.

Roopa Kudva, managing director and chief executive officer, CRISIL said, "What we are seeing right now is not confined to small and medium enterprises, and it is not something unexpected." She said that banks' NPAs would be on a rising trend with the economic recovery in process and would probably reach a peak of 4.50 %.