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CS Professional · Banking and Insurance - Laws and Practice · Analysis of Financial Statements of Banks

Rampur Commercial Bank reports in its balance sheet a line titled 'Deposits' and another titled 'Borrowings'. A student asks where the bank's savings account balances and the money it has taken from RBI under repo should be shown. Which placement is correct under the format used by Indian banks?

Savings account balances are shown under Deposits, while money taken from RBI under repo is shown under Borrowings. Deposits represent customer liabilities, whereas Borrowings capture funds raised from RBI, other banks and institutions, so the two must be reported separately in the bank balance sheet.

  1. ASavings balances under Deposits; repo funds from RBI under BorrowingsCorrect
  2. BSavings balances under Borrowings; repo funds from RBI under Deposits
  3. CBoth under Deposits
  4. DBoth under Other Liabilities and Provisions

Explanation

In the Indian bank balance sheet format, customer money (current, savings, term) is shown under Deposits (Schedule 3). Funds raised from RBI, other banks and institutions, including repo borrowings, appear under Borrowings (Schedule 4). The reversed or merged options misclassify customer liabilities versus institutional funding.

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