XBRL at the Reserve Bank of India

Written by Dr. A.S. Ramasastri     Posted on June 22, 2009

Dr. A.S. Ramasastri is an Adviser to the Reserve Bank of India (RBI). He has been coordinating the implementation of XBRL-based data submission by banks to the RBI. The views expressed in this blog are that of the author's and not necessarily those of the Reserve Bank of India.

Looking back now, I think that the idea of XBRL at the RBI originated sometime in 2001 as a way of disentangling a very complex system of data collection from commercial banks.

The process we went through reminds me of an Indian mythological story. In order to destroy an enemy, the Lord Vishnu comes in the form of Vamana, a very short boy, but grows Himself to cover the universe – in exactly three steps

We conquered our data collection demon in a similar three steps.

Step 1 (2001)
About 20 departments of the RBI located in 20 locations receive 250 “returns” from around 200 commercial banks.  These returns  — which are received on  a daily, fortnightly, monthly, quarterly, or in some cases, annual basis -- represent data for about 70,000 bank branches.

India has a widely varied economic picture, with different degrees of technology adoption by banks. Modes of communication between the RBI and the commercial banks have been to a great extent dictated by the individual levels of technology adoption.

In 2001, we took a survey of the commercial banks about the mode in use and their preferred mode for submitting returns to the Reserve Bank. The results of the survey revealed that the banks were prepared to adopt a Web-based solution. From this, we developed the concept of a single electronic submission window.

Step 2 (2004)
We successfully implemented a Web-based submission system for a fortnightly return. The commercial banks enter the data or upload an XML file on the Web which, in turn, is pushed to all users within the RBI. Called the On-line Returns Filing System (ORFS), this system reduced time-lag and considerably increased data quality.

Owing to its popularity with both the RBI and commercial banks, the scope of ORFS steadily expanded. As ORFS started to grow, we also began to realize two major limitations:

(1)   Data discrepancies across the returns occurred because many of the returns have common elements.  While they are supposed to match, or at least close enough, there was still enough variability to make the information inconsistent.
(2)   ORFS was visualized only as a data-pushing channel, with no back-end processing, query, and analytical tools. This created a longer-term limitation on the effectiveness of the system.

We had to find solutions to these problems.

Step 3 (2007)
When we looked around, we found that eXtensible Business Reporting Language (XBRL) had been developed to provide solutions to such problems. XBRL taxonomies can serve as standards in data submission, and reporting tools of XBRL can help in providing reasonably good query and analysis facilities. We also found that regulators in a few other countries, including central banks, have started adopting XBRL-based solutions. With the objective of adopting XBRL for return submission by commercial banks, the RBI formed a High Level Steering Committee (under the chairmanship of a deputy governor) that chartered a pilot survey for studying the feasibility of adopting an XBRL-based data submission system.

After considering the views of the commercial banks, the Committee decided to adopt an XBRL-based data submission system in a phased manner. Five returns were considered for the first phase, the important ones being Basel II data reporting system (officially called RCA-II) and financial statements; of these, the first one is already live and others are in the final stages of implementation.

As in the legend, our dwarf effort in 2001 has grown substantially and is influencing India’s adoption of XBRL in all the spheres of financial reporting. The initiative by the RBI probably invigorated efforts surrounding XBRL implementation by other stake holders. Specifically, India's securities market regulator SEBI is in the process of mandating XBRL data submission of quarterly results by major listed companies. On initiative from the accounting standard body ICAI, India now has its provisional XBRL-India jurisdiction. 

While the data collection demon has not been fully destroyed, he has certainly been humbled…and we anticipate a full victory in the near future.