The Hindu Business Line : `Converge fully with global financial reporting standards'

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New Delhi Feb. 13 Listed public companies may get to raise foreign capital at a much lower cost in the coming months, with the Indian accountancy body ICAI likely to mandate that such entities should entirely adopt international financial reporting standards (IFRS).

Hectic parleys are on between the International Accounting Standard Board (IASB), the Institute of Chartered Accountants of India (ICAI) and the Government on how best and to what extent to sort out the differences between the Indian accounting standards and the IFRS.

"A full convergence is a way of reducing cost of capital for India.

"It would promote inward investment and also growth. We are keen that India joins the other 100 plus countries that have adopted IFRS in full," Sir David Tweedie, Chairman of the IASB, said after meeting the Union Company Affairs Minister, Mr Prem Chand Gupta, here today.

Sir David, who is leading an IASB delegation, plans to meet top officials at the Finance Ministry, the Reserve Bank of India, the Securities and Exchange Board of India over the next few days and encourage them to ensure that India completely converges with the IFRS.

The ICAI has been maintaining that the Indian accounting standards are largely in line with IFRS.

"There are only some differences on the conceptual, fundamental and legal front. We can get over them. The IASB delegation is here to discuss those.

They are saying that either convince us (Indian standard is better) or get convinced (about IFRS)," Mr Sunil Talati, ICAI President, said.

Infosys Technologies Board Member, Mr T.V. Mohandas Pai, however, said that it would not be enough for India to merely state that Indian accounting standards are largely compliant with IFRS.

"World looks at us in two ways - compliant or non-compliant. There is no scope for in betweens," Mr Pai said.

He highlighted that accounting standard was one of the areas where the world looks at India differently.

Complete convergence

A complete convergence with IFRS would help lower the cost of foreign capital for Indian companies as the existing "risk premium" attached to India would diminish once full convergence is achieved, he said.

Mr Pai, who also attended the meeting with Mr Prem Chand Gupta, said that Indian companies could raise foreign capital from a wider source of investors (like pension funds, etc) if the world gets to know that India is "fully converged" with IFRS.

Mr Talati said that an ICAI-appointed task force will examine various obstacles in achieving full convergence and come up with suitable recommendations.

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