The document discusses regulatory reporting requirements for banks in India to the Reserve Bank of India (RBI). It outlines the RBI's adoption of XBRL (eXtensible Business Reporting Language) and Online Returns Filing System (ORFS) to standardize reporting. Banks are required to submit various periodic returns to RBI through these electronic platforms. The document provides details on key returns like Form A, Capital Adequacy Return (RCA2), and Gaps Positions and Balances (GPB) returns and the underlying XBRL taxonomies defined for them. It also discusses benefits of automated regulatory reporting tools for banks and proposes a process flow and key features for such a tool.
1. Regulatory Reporting by Banks to RBI
Introduction
XBRL (eXtensible Business Reporting Language) is a revolutionary concept in the world of business
and financial information and will have a far reaching impact across the entire financial reporting
chain. Worldwide adoption of XBRL as the information standard for business and financial reporting
has gathered substantial pace in past two years with regulators in US, Japan, European Union and
now in India successfully implementing XBRL based reporting systems.
In India, the Reserve Bank of India (RBI) has been a pioneer in the adoption of XBRL for reporting to
the regulator by banks. A road map has been created by the RBI to convert all reports into XBRL
formats. Starting with Basel II Return (more commonly known as RCA2), Form 'A' & financial reports,
all returns submitted to the RBI will be progressively be migrated into the XBRL reporting structure.
The XBRL based electronic filing platform will help both the RBI and the reporting banks to ensure
high quality of data and in building a host of MIS reports.
What banks need to do?
Banks first need to login to the RBI portal and download an application. This application will help them
prepare data for filing with the RBI. A user in the bank needs to fill in data in an excel sheet and then
can create an XBRL instance document using the program embedded in the excel sheet. While this
process seems simple, collating data from multiple sources & aggregating it manually to fill the
hundreds of cells in the reporting Excel template could be an enormous task.
There is hence a need for the banks to gear up to enable smooth reporting into the XBRL reporting
formats as specified by the RBI. Banks need a Tool to enable the bank's systems to not only report to
the RBI in an XBRL format, but also provide the scope for creating an XBRL data repository to meet
internal reporting, monitoring, MIS and auditing requirements.
The Automated Data Flow (ADF) guidelines by RBI
RBI has classified banks into six clusters depending on their process and technology maturity and
recommends a suitable solutions approach. The proposed Automated Data Flow solution comprises
four key components as depicted below:
Based on their process and technology maturity, forward-thinking banking institutions would need to
plan their automated data flow implementation roadmap.
OFRS
As a part of regulatory and supervisory functions bestowed on it, the Reserve Bank of India collects
various fixed format data (called 'Returns') from commercial banks, financial institutions, authorized
dealers and non-banking financial institutions. Many of these returns are statutory under Reserve
Bank of India Act 1934, Banking Regulation Act 1949, Foreign Exchange Management Act 1999, etc.
Submission frequency of these returns varies from daily, weekly, fortnightly, monthly, quarterly, half-
yearly and annual.
2. Regulatory Reporting by Banks to RBI
Conventional form of returns submission follows traditional and non-web based modes of
communication, viz., hard copies send through postal service, faxes and PDF files send through e-
mails. With the evolution of computers, some returns are collected through pre-coded software
distributed across banks.
All these modes of returns collection have their own limitations. Online Returns Filing System (ORFS)
is a single window returns submission system which harnesses the power of internet. Incorporating
any change in the return template requires modification of the application software hosted centrally
and is accessible using web technology, thus not require re-distribution of any software to the banks.
ORFS also has incorporated digital signature for additional data security during data transmission,
over and above it has exclusive network security implemented on the secured web-server and its
peripherals.
Initially, ORFS was developed for one of the most important returns, namely, Form A return being
submitted by banks as per Section 42(2) of the Reserve Bank of India Act 1934. This is a fortnightly
return, submitted by banks on 'Reporting Fridays'. The system has slowly expanded to other returns.
Currently, around 58 returns are at various stages of implementation. A list of returns is available here
for submission using ORFS.
Name of the return Concerned Department
Form 'A'
IX DBOD
VIII
BAL DSIM
GPB
FTD
FIIS
LRS
FED
MV
FVCI
IOFHNI
FCTRS
CPR
STL
IRS DBS
MAP (OSMOS Division)
SIR
RIS
Under ORFS, commercial banks enter data or upload return online through the web based front-end,
access of which is given to banks through a user based access policy. Returns submitted by banks
first reaches a central data pool, which is then pushed to the user departments in the Reserve Bank.
ORFS recognizes the power of eXtensible Markup Language (XML), which is the basic
communication format between the front-end and central data pool, and, between central data pool
and computer systems used by user departments within the Reserve Bank.
ORFS has reduced the reporting burden of banks and avoids the need for multiple submissions of
returns at various departments of Reserve Bank. The online validation checks improved the quality of
information to a large extend.
It also resulted in reducing time lag of data submission by banks and data processing by user
departments of RBI considerably.
Author: Partho H. Chakraborty 2
3. Regulatory Reporting by Banks to RBI
ONLINE REPORTING
Reserve Bank of India receives various returns on daily, fortnightly, monthly, quarterly and annually
from scheduled commercial banks. During the process, the mode of submitting returns by commercial
banks to Reserve Bank of India has been dictated mostly with different degrees of technology
adopted by banks. Hence a need was felt for developing a single electronic returns submission
window – thus came Online Return Filing System (ORFS).
As a part of online filing of returns, the Reserve bank of India also felt the need for adoption of best
international technology solution, such as eXtensible Business Reporting Language (XBRL), which
attempts standardization of business reporting, especially financial reporting. This evolving standard
is likely to bring in significant benefits in the preparation, analysis and communication of business
information. Thus, while ORFS has no standardizations across the returns, XBRL is capable of
implementing global standards across all returns. The effort is towards building taxonomy for the
entire financial sector, irrespective of the financial segments.
At present, ORFS is implemented for a host of returns, such as Section 42(2) Form A of RBI Act,
1934 and daily return on Gap, Positions and Balances (GPB). XBRL standard is implemented for
Returns on Capital Adequacy (RCA2 - a set of regulatory returns designed as per Basel II guidelines).
This website hosts online submission of returns, both through ORFS and XBRL, which co-exist with
other conventional forms of return submission.
Taxonomies developed for RCA2 return is given below
XRBL
The basic idea behind eXtensible Business Reporting Language (XBRL) is simple: Instead of treating
financial information as a block of text or numeric items, attach a unique electronically readable tag for
each individual financial term. It is not just data or text that floats around, these individual items moves
along with an electronic tag. Thus, it is not just 'content' but also the 'context' that is being transmitted.
Technically, XBRL is a specialization of XML in finance and accounting, and XBRL is leveraging XML
to the maximum extend.
Within the Reserve Bank, XBRL has been viewed as a natural evolution of its existing Online Returns
Filing System (ORFS). While ORFS does the job of data capturing and transmission of returns from
banks to the Reserve Bank, it incorporates no in-built standardization. XBRL enables standardization
and rationalization of elements of different returns using internationally recognized best practices in
electronic transmission. In the process, XBRL also facilitates rationalization of number of returns to be
submitted by the banks, thus reducing the reporting burden on banks.
The Reserve Bank could bring down the number of returns from 291 to 225 (vide RBI press release
dated August 14, 2008 and December 17, 2008.
Standardization of data elements is achieved in XBRL by defining a set of 'taxonomies'. Taxonomies
have to be in sync with the global taxonomy as recognized by XBRL International Inc (XII), which is a
consortium of regulators, financial standards bodies and technology providers. XBRL is an open
standard.
The responsibilities of forming XBRL national jurisdiction and implementation of the standards for
financial reporting in India have been entrusted to the Institute of Chartered Accountants of India
(ICAI). The Reserve Bank is responsible for implementing the XBRL standard for banks' reporting.
Within the Reserve Bank, XBRL implementation is being regularly monitored by a High Level Steering
Committee appointed by the Governor.
Currently, besides Form 'A', a statutory return under Sec 42(2) of RBI Act 1934, a return on Gap,
Positions and Balances GPB) and a set of returns for monitoring capital adequacy (called RCA-2)
have been implemented using XBRL.
Author: Partho H. Chakraborty 3
4. Regulatory Reporting by Banks to RBI
Taxonomies used for the three returns have the core taxonomy as Commerce & Industry taxonomy
developed by ICAI and have been extended appropriately. Further, the RCA-2 taxonomy is broadly
based on CoRep Taxonomy of the European Union and is also in sync with Commerce & Industry
taxonomy.
Non XBRL Based Filing
Login Page XRBL
Author: Partho H. Chakraborty 4
5. Regulatory Reporting by Banks to RBI
Form A
With a view to monitoring compliance with Cash Reserve Ratio (CRR) by the Scheduled Commercial
Banks (SCBs), the Reserve Bank has prescribed a statutory return, i.e., Form A return under Section
42 (2) of the Reserve Bank of India Act 1934. All SCBs are required to submit a provisional return in
Form 'A' within 7 days from the expiry of the relevant fortnight. All SCBs data are then disseminated
through a Press Communiqué and also through Weekly Statistical Supplement. In addition to
monitoring of CRR of banks, the data from the return are also used for compilation of monetary
aggregates.
The final Form 'A' / 'B' is required to be sent to RBI within 20 days from expiry of the relevant fortnight.
Data from final Form 'A' / 'B' are disseminated through the Reserve Bank of India Bulletin.
The Working Group on "Money Supply: Analytics and Methodology of Compilation (1998)" (Chairman:
Dr.Y.V.Reddy) suggested some major additions in the return by including a memorandum and two
annexure, covering data on foreign currency liabilities and assets, investments in non-approved
securities, subscription to shares, debentures, bonds etc. Current format of the return follows these
recommendations.
It uses the underlying XBRL taxonomy for defining the elements. This taxonomy will represent the
elements with multi-dimensional view using the Dimensions concept as defined in the Specification
1.0, a part of the XBRL 2.1 standard.
RETURNS ON CAPITAL ADEQUACY
The Capital Adequacy Return (RCA2) is based on Basel II related Capital Measurement framework
issued by the Reserve Bank, keeping in view it's goal to have consistency and harmony with
international standards . The return is mainly used by RBI for assessing the credit, market and
operational risk exposures and the capital held vis-à-vis those risks by the commercial banks in India.
The main approaches prescribed by the Reserve Bank include Standardized Approach (SA) for credit
risk, Basic Indicator Approach (BIA) for operational risk and Standardized Duration Approach (SDA)
for market risk. The RCA2 reporting system leverages XBRL platform as part of a secured web based
Electronic filing system for data submission and reporting.
A XBRL taxonomy, specific to this return and which enables a multi-dimensional view of the data
elements, supports a front-end spreadsheet based reporting template for entering relevant data by
banks.
It uses the underlying XBRL taxonomy for defining the elements. This taxonomy will represent the
elements with multi-dimensional view using the Dimensions concept as defined in the Specification
1.0, a part of the XBRL 2.1 standard.
RCA2_Taxonomy.zip Sample_Instance_Documents_07-08-09.zip
Author: Partho H. Chakraborty 5
6. Regulatory Reporting by Banks to RBI
GAPS POSITIONS AND BALANCES (GPB)
As per extant instructions, net overnight open position limit (NOPL) and aggregate gap limit (AGL) of
AD Cat-I banks are required to be approved by the Reserve Bank. For AD Cat-I banks incorporated in
India, the exposure limits fixed by the Board should be the aggregate for all branches including their
overseas branches and Off-shore Banking Units. For AD Cat-I foreign banks, the limits will cover only
their branches in India. The Head/Principal Office of each AD Category-I bank should submit daily
statement of Gaps, Position and Cash Balances in Form GPB through the Online Returns Filing
System (ORFS)/ XBRL as per the format prescribed. AD Category-I banks may ensure that the
reports are properly compiled on the basis of the prescribed guidelines. The data for a particular date
has to reach RBI by the close of business of the following working day.
It uses the underlying XBRL taxonomy for defining the elements. This taxonomy will represent the
elements with multi-dimensional view using the Dimensions concept as defined in the Specification
1.0, a part of the XBRL 2.1 standard.
FormGPB_Taxonomy.zip
High Level Overview
A new comer needs to develop a Tool which, will act as a bridge between the banks' internal data
systems and RBI's regulatory reports. It needs to have a staging database which acts as an
intermediate repository of data. Broadly, the tool should consist of two components:
• One-time configuration and mapping
• Internal Data Extraction, Aggregation & Loading engine
If an ETL Tool is used then, it must be able to extract Data and feed it to BI, where BI will be used to
generate reports
The process flow diagram below explains the steps visually:
Aggregation Logic for
Data Computation
Extract Data for RBI Data Filter to perform
Reporting Business Validations
Configure the Tool to Load Processed Data
configure internally with in XBRL Template
the bank’s system
Bank’s Internal RBI Submission
System
Author: Partho H. Chakraborty 6
7. Regulatory Reporting by Banks to RBI
Process Flow for ETL Tool and BI
Bank’s Internal ETL Tool
Data Store
System
Validate Reports Business
Reports Intelligence
Load Processed Data RBI Submission
in XBRL Template
Key Features
Login based access: Only users authenticated would be allowed access to the system, making it
secure.
Multiple input data formats: The tool should consume data directly from the source systems in
various formats such as text, csv, database etc.
Integration tool: An XTract wizard can be provided which can help to set up the data extraction logic.
User-friendly environment to map tags: It should provide a variety of features with inbuilt
validations to make the initial configuration and mapping very user friendly.
Mirror mappings: It is should have a unique user friendly mapping feature.
Validations: All the business validations, technical validations as well as XBRL validations should be
performed at every step of the processing.
Aggregation: The tool should be intelligent enough to handle and perform all the required categorical
aggregation for the related data items.
Business rules validation: Business rule specified by the RBI or the bank can be incorporated in the
data extraction process.
Data loading on RBI templates (say, RCA2): Once the data to be reported is in place, the
compliance officer needs to run the loader which will use all the previously defined configurations and
mappings, extract the data from the sources, run the aggregation logic, filter out irrelevant data based
on the business rules defined and then load the data directly into the RBI-defined template.
Dashboard: Ideally Dashboard must be provided to get a synopsis of the various reports
RBI
Author: Partho H. Chakraborty 7
8. Regulatory Reporting by Banks to RBI
How will banks benefit
Banks can get rid of manual extraction, computation and filing of the data in these template. They can
also rely completely on the quality and accuracy of the data generated by the Tool. This is a clear
time-saver. It will help banks in meeting the strict RBI deadlines for filing data.
This time savings will get more pronounced as and when more reports get added in the XBRL
reporting framework. Banks can get rid of manual extraction, computation and filing of the data in this
template. They can also rely completely on the quality and accuracy of the data generated. This is a
clear time-saver. It will help banks in meeting the strict RBI deadlines for filing data.
POC
POC should be done ideally on:
1. Basic Statistical returns
2. Risk management & Capital adequacy
3. Recovery, Defaulters, Bad debt
Methodology
This is a classic case of Build V/s Buy. Many firms have built a tool to search out the required data,
collate it, validate it and then push it to RBI, with Dashboards as Value Add. Most of these are tested
with various banks and can be replicated easily.
For a new comer, there are 2 options. They either build such a tool or develop an expertise to sieve
out the correct data from a whole mass of data and use BI to generate reports. If done in 1 bank
successfully, then it can be replicated in other banks given the logic and process remains the same.
Steps
1. Identify 5 Reports
2. Get Sample Data for 5 Reports
3. Use ETL Tool to pick up the correct data for each Report
4. Push the data to a Data Store
5. Use BI to generate the Reports
6. Validate the Data
Advantages
All banks have BI and ETL tool and thus it is more of costs on Man-Hour basis where they do not
have to buy anything extra. SO it is a cost savings in terms of not purchasing new utilities, software,
etc.
There is no license cost and the bank is in total control of the reports to be submitted to RBI. They can
also train people internally to generate reports.
Dis-advantages
Reports are dynamic and with new reports or modification of older reports or combining 2 or more
reports completely or partially would mean to re-work on the Logic. This might be time consuming.
Also The BI would be used for other purposes unlike the readymade solutions which are Report
Generation only. This could prove challenging especially when a lot of reports have to be generated
for multiple stake-holders apart from RBI.
Author: Partho H. Chakraborty 8
9. Regulatory Reporting by Banks to RBI
Another important fact is that if the BI crashes or does not work for any reason whatsoever, it could
hold them back from generating reports till rectified. But if the tool acquired from vendors
malfunctions, they can always get a replacement to get the work going.
Actual Test
What we are proposing is to show some data manufactured to the likeliness of real data and then to
churn it out to give the report. I am not too sure if it will not do as our data is in a glass house
environment. It is very easy to spot it and use it. In a real scenario the data will be in various locations,
and in various formats just imagine in a Jungle. We will have to find it out, extract it and then churn it
to get the required report. After we get the report we need to validate it before submitting it to RBI.
The challenge is immense here.
The other challenge is to get the required data and the RBI formats
Software Requirements
The most important component is the Logic to extract data and have it processed under BI to give the
desired results
Hardware Requirements
ETL Tool
Data Store
BI
Other Requirements
Information or Template, which RBI provides to banks to help them capture and generate reports
Time Frame
At least 15 days to do a POC for any 5 reports
Returns
There are 223 Returns to be filed with RBI, where some are filed daily, fortnightly, monthly, quarterly
and annually. A sample is given as follows:
• Basic Statistical returns
• Forex & International Ops
• Investment in treasury
• DSB Returns
• Advances
• Deposits
• Risk management & Capital adequacy
• Financial inclusion
• Balance sheet connected returns
• Frauds
• Reconciliation
• Recovery, Defaulters, Bad debt
Author: Partho H. Chakraborty 9
10. Regulatory Reporting by Banks to RBI
Embedded below is comprehensive list of Returns to be filed with RBI
List of Statistical
List of Returns.xlsx Returns to be submitt
Sample Data for Delinquencies
This data also has a Dashboard associated with it. The Dashboard is a .swf file
NPAs.xls
Note: Names if any, are Suggestive only and without any relation to any real entity
whatsoever. It is only to give a feel and touch of how transactions can be
structured and names are indicative
This article is meant for education purposes only and it is not be reproduced
for any commercial purpose by print or electronic medium whatsoever
This case study is written by with inputs from RBI:
Partho H. Chakraborty
A - 305, DSR Spring Beauty Apts., 124/1, ITPL Main Road, Brookefields, Kundalahalli, Bangalore -
560 037, India
Tel: +91 80 420 50293, Cell: +91 99863 22504
email: parthohc@airtelmail.in; parthohc@rediffmail.com
Skype: parthohc01
Author: Partho H. Chakraborty 10