So, Chotu, what was Urjitbhai up to today? Bank stocks seem to have had a lot of fun.

Arrey Motu, you know that Urjitbhai has been in a generous mood these last few days...

Haan, I remember, last week he told banks they could spread the losses on their bond holdings over four quarters. Rajnishji and the others were jumping for joy...

Oh wait, that was just the start, Motu. You remember that his office referred some 35 large borrowers for insolvency proceedings six months ago? On Wednesday, bhaisaab allowed banks to set aside a lower part of the dues from these borrowers as provisions in their accounts.

Chotu, this is too arcane for my fat head but I can make out that Urjitbhai is trying to put some make-up and lip-stick on emaciated bank balance-sheets.

Something seems to have finally broken through that thick wall in your head....

Ah, stop that wisecrack now and tell me more...

Well, you know Urjitbhai’s day out which comes once in every two months? The day when everyone from Modibhai downwards waits with bated breath to see if Bhaisaab will be a killjoy or Santa Claus? Today was that day...

And I know what comes next, Chotu. It was his Santa Claus avatar today, right? What did he gift banks this time?

He freed them from the clutches of this ogre called Ind AS for one more year. Banks, as you know, were living in dread of this creature which they were supposed to embrace from this fiscal.

Chotu, yeh Ind AS kya cheez hai?

Geez, I should have guessed you wouldn’t know. Well, let me put it simply. Ind AS is a set of accounting rules introduced to bring our accounting standards to global levels. They harmonise our existing accounting rules with International Financial Reporting Standards or IFRS.

So, what’s the problem in that?

Ind AS norms are much more stringent than existing standards. Adopting them would have resulted in showing the financials of banks in poorer light.

Is that even possible, Chotu?

I can see you’ve not lost your sense of humour. Some of the Ind AS rules would have caused banks a lot of grief indeed. Like, you know that banks routinely give loans to staff at concessional rate of interest...

Oh yes, I know and I’ve always envied them for that.

Well, under Ind AS, banks have to treat the difference between the concessional rate and the rate they charge customers as a hidden loss which means their profits will come down. And that’s the smallest of the changes. At a larger level, loan loss provisions will shoot up.

I see. What are the other goodies from Urjitbhai?

Oh well, do you know that our actual inflation rate is 0.35 per centage points lower than what we think it is?

You’re kidding me, Chotu.

That’s what bhaisaab would have us believe. Here’s the deal: in the headline inflation we have a housing component. This takes the prevailing rentals for private housing. In the case of government housing it takes the actual HRA paid to employees. The 7th Pay Commission increased the HRA by 105 per cent which has been accounted for as rentals in inflation calculation. Urjitbhai says that we have to exclude this as it is statistical and no rent has been paid.

Oh wow! That’s rich...so this means our inflation is lower by 0.35 per centage points? But don’t we have such statistical assumptions in GDP calculations too?

Yes, indeed. Growth data for the unorganised sector, which accounts for 45 per cent of GDP, is extrapolated from surveys and from the performance of the organised sector.

So, Chotu, do you think...

I know your question, Motu... And I’m not answering that!

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