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Bank of India: Financial Reporting Policies
內容大綱
In January 2015, an investor bought 1,000 shares of Bank of India stock when the banking sector was expected to perform better over the medium to long term. On October 11, 2019, after holding the shares for nearly five years, the investor was surprised to see that the stock price had instead dropped by almost 80 per cent. He was disappointed in his investment’s performance to date, but the stock’s current low price seemed a bargain, so he was contemplating buying more shares for overall cost averaging of his investment. Before making any investment decisions, however, he carefully analyzed the bank’s annual reports for the previous five years and discovered an unusual change in the bank’s accounting policy for the provisioning of non-performing assets. After his review of the bank’s financial statements, the investor was unsure whether he should sell his shares, buy more shares to achieve overall cost averaging, or hold the number of shares he currently owned.
學習目標
This case is intended for undergraduate- and graduate-level courses on financial accounting and reporting, bank management, and corporate governance. After working through the case and assignment questions, students will be able to<ul><li>understand the general banking industry in India;</li><li>understand the concept classification of loan assets and provisions related to different loans and advances;</li><li>discuss non-performing assets in the banking sector in general and related regulatory norms;</li><li>evaluate the financial performance of the Bank of India;</li><li>analyze how the bank has changed its level of provisions for bad loans and improved its asset quality; and</li><li>analyze how the Bank of India has changed its accounting procedure in consecutive years to report a lower amount of loss, without violating regulatory guidelines.</li></ul>