Indian Banking Taxonomies and Its Complexities

1. Indian Banking Taxonomies and Its Complexities IBA – RBI Workshop 30th October, 2009

2. The XBRL Journey Has Begun – Where are you?

3. Consider this.. • Are you an XBRL User? • Why should I get down to the plumbing ? • Do you want to get into XBRL Internals ? • How does this help me?

4. In This Session • XBRL Taxonomies – A quick look at the concepts • The Taxonomy building process • XBRL Taxonomies with the RBI • Harmonization with the Indian GAAP taxonomy • Way Forward

5. TAXONOMIES

6. XBRL Taxonomies A system understandable description and classification of business and financial terms • It is commonly referred to as dictionary of business and financial terms • Contains the universe of accounting and other related concepts • Contains the XBRL properties of the elements

7. Role of taxonomies

8. XBRL – A Quick Recap XBRL is an XML based standard

9. And XML … • XML is a key Internet standard for transmission and interoperability • Electronic transmission is newer than electronic storage • With the growth of the Internet, transmission of data is exploding • No Interoperability problems earlier – lots of interoperability problems now • XML uses "tags" to define data and is self-descriptive • XML has been developed by w3 consortium

10. XBRL combines hierarchical xml data with relationships and references between the data points. It uses Xlink technology of linking xml files It links the data xml files with various other files containing definitions, presentation, calculation, references relationships XBRL data files are a set of xml and xsd files. Extending XML - XBRL

11. Key Taxonomy Concepts Taxonomy Built from Schema and linkbases Schema • Contains the element declarations • XBRL properties (Data type, Balance type etc.) Linkbases • Interrelationships between elements • References to regulatory material • Human readable definitions of elements • Five types of linkbases

12. XBRL Taxonomy & Instance Architecture XBRL Data XBRL Data Definition XBRL Data Relationships

13. XBRL Taxonomy & Instance Architecture Contd. • Let’s take following data as sample: • Bajaj Auto Limited, March 31 2009 Report • Statement of Income

14. XBRL Taxonomy & Instance Architecture Contd. Calculation linkbase: IncomeTotal NetSales +1 Sales +1 Excise -1 OtherIncome +1 Presentation linkbase: IncomeHeading Sales 10 Excise 20 OtherIncome 30 NetSales 40 IncomeTotal 50 Definition linkbase: Income by Product Product A Product B Income by Region Asia Africa Europe Latin America Reference linkbase: IncomeTotal IAS 9 SalesIAS9 Excise IAS 2,10 Formula: Expense Ratio = Sales / Expenses Label linkbase: IncomeTotal Total Income IncomeTotal आय (Hin) IncomeTotal Inc. Relationship Layer Schema: Element Name: Income Abstract = false Type: monetaryItemype Balance: Debit XBRL Data:IncomeTotal 12234.0 Sales 22345.0 Less: Excise Duty 1000.0 Net Sales 3349.0 Other Income 1000.8 XBRL Data:IncomeTotal 89322.6 Sales 90496.9 Less: Excise Duty 6127.2 Net Sales 84369.4 Other Income 4953.2 Data Instance: Company A Data Instance: Company B Definition

15. Dimensions

16. Dimensions in XBRL • The XBRL 2.1 base specification enables storing defined set of dimensions for a data element: All of these dimensions together uniquely identify the data point 20000

17. Dimensions in XBRL • The dimensions specifications released in 2008 enable storing additional dimensions. • In the previous example:Revenue has two dimensions, By Product & By Region. • Other Examples: • Investments by Type, by Periodicity. • Advances in India, outside India • Credit Risk On Balance Sheet, Off Balance Sheet

18. Terminology in Dimensions • Primary Item • Hypercube • Dimension • Domain and Domain Member • Explicit and Implicit Dimensions • Aggregator-Contributor • All / Not All composers

19. Few XBRL Taxonomies around the world.. • US-GAAP 2009 • Financial Reporting to US SEC • IFRS 2009 • Represents IFRS 2009 • FinRep & Corep • Financial Reporting & BASEL II based Reporting in CEBS* • XBRL GL Indian Taxonomies • Indian GAAP • Based on IFRS 2006 Architecture • Caters to Indian Accounting Standards • Taxonomy owned by ICAI • RBI – BASEL II • Based on Corep, though have a different architecture • Used by banks to file their RCA (Returns on Capital Adequacy) • Taxonomy owned by RBI

20. Taxonomies designed for RBI.. • RCA 2 Taxonomy for BASEL II Returns • Form A taxonomy for Section 42 returns • Taxonomy for GPB returns • Taxonomy for Financial Reporting * Based on the underlying principle – common elements to be defined only once

21. Building taxonomies…

22. Steps in taxonomy building • Identifying the elements • Determining the interrelationship amongst the elements • Defining the XBRL properties of elements • Modeling the elements and their interrelationship in the taxonomy • Validating the taxonomy

23. RCA 2 Taxonomy

24. RCA2 taxonomy • Taxonomy tailored to Basel II Reporting Requirements • XBRL 2.1 and Dimensional Specification Compliant • Taxonomy Architecture along COREP lines • Multi dimensional in nature

25. RCA2 taxonomy Statistics Taxonomy files

26. ICAi taxonomies

27. ICAI Taxonomy Structure • Industry-based classification • Commercial and Industrial companies • Banking companies • Non-Banking Financial companies • Core Schema • Exhaustive list of all element declarations • Common elements defined once • Distinct extended links for each industry

28. ICAI : C&I Taxonomy • Statistics • Prefix : in-gaap • Status : Exposure draft

29. ICAI : Bank Taxonomy Element identification • Analysis of regulatory literature. • Banking regulation Act • Annual Reports of 25 banks (documenting common practice) • SEBI Listing agreement • Accounting standards* • Companies Act* *These have been referred while defining C&I taxonomy. • Identifying the common elements, already defined in C&I taxonomy # # Additional task required for designing subsequent taxonomies

30. ICAI : Bank Taxonomy • Taxonomy Structure • Based on IFRS 2006 structure • Banking specific tags have been defined additionally in the core schema • Separate extended links for the bank reporting appended to existing taxonomy • Basic structure of financial statements and their details, both included in the same extended link (unlike C&I) • No dimensions have been defined, instead extended links have been used • Primary references – BR Act and RBI circulars

31. ICAI : Banks Taxonomy • Statistics • Prefix : in-gaap *Excluding dimensions

32. IFRS 2006 Vs. IFRS 2008

33. HARMONIZING Taxonomies – ICAI & RBI

34. Taxonomy Structure ICAI Core schema RBI Reporting Requirements (ICAI elements + Common elements) RCA 2 Banks Form A NBFC Industry specific entry-points GPB C&I

35. Prefixes

36. The XBRL Journey Has Begun – Where are you?

37. COREp-finrep taxonomies

38. Overview :COREP –FINREP Taxonomies COREP : Common Reporting framework for the new solvency ratio for credit institutions FINREP Financial reporting framework for credit institutions

39. COREP –FINREP taxonomies FINREP Structure • Imports elements from IFRS 2006 taxonomy • Defined additional elements for financial reporting • The relationships (or the linkbases) are newly defined • Usage of dimensions • Prefix of extended elements – p-FINREP

40. COREP –FINREP taxonomies COREP structure • Designed for a multidimensional data • Concept of separate primary and dimensional taxonomies • Within primary taxonomies, further classification of common taxonomy and specific taxonomy • Prefixes : • d- :dimensional taxonomies, • p- : primary specific taxonomy • p-cm : primary common taxonomy

41. Questions

42. Thank You!