5 Billion Entities Exempt from Banking Regulation

In a move aimed at promoting transparency and accountability, the government has announced that five billion entities will be exempted from banking regulation under the Banking Act, 2006.

Who is Exempt?

The exemption applies to:

Commercial banks
State-owned enterprises (SOEs)
Insurance companies
Listed companies
Corporate bodies not defined as small and medium-sized enterprises (SMEs)

This means that these entities will no longer be subject to the banking regulations outlined in the Act.

Timeline for Exemption

The exemption comes into effect from:

2014-15: Commercial banks and SOEs
2015-16: Other financial institutions, SOEs, insurance companies, listed companies, and corporate bodies not defined as SMEs
2016-17: SMEs will have to comply with the new financial reporting standards (NFRS)

New Financial Reporting Standards

The NFRS includes standards for:

Presentation of financial statements
Inventories
Statement of cash flows
Accounting policies
Changes in accounting estimates & error
Events after the reporting period
Construction contracts
Income taxes
Property, plant and equipment
Leases
Revenue
Employee benefits
Government grants and disclosure of government assistance
Effects of changes in foreign exchange rates
Borrowing cost
Related party disclosures

Impact on Financial Sector

The exemption is seen as a move to reduce regulatory burden on these entities and promote their growth and development. However, critics have raised concerns that this may lead to a lack of transparency and accountability in the financial sector.

It remains to be seen how this exemption will impact the financial sector and whether it will lead to greater transparency and accountability or reduced oversight.