The basic idea behind eXtensible Business Reporting Language (XBRL) is simple: Instead of treating financial information as a block of text or numeric items, attach a unique electronically readable tag for each individual financial term. It is not just data or text that floats around, these individual items moves along with an electronic tag. Thus, it is not just 'content' but also the 'context' that is being transmitted.
Technically, XBRL is a specialization of XML in finance and accounting, and XBRL is leveraging XML to the maximum extend.
Within the Reserve Bank, XBRL has been viewed as a natural evolution of its existing Online Returns Filing System (ORFS). While ORFS does the job of data capturing and transmission of returns from banks to the Reserve Bank, it incorporates no in-built standardization. XBRL enables standardization and rationalization of elements of different returns using internationally recognized best practices in electronic transmission. In the process, XBRL also facilitates rationalization of number of returns to be submitted by the banks, thus reducing the reporting burden on banks.
The Reserve Bank could bring down the number of returns from 291 to 225 (vide RBI press release dated August 14, 2008 and December 17, 2008.
Standardization of data elements is achieved in XBRL by defining a set of 'taxonomies'. Taxonomies have to be in sync with the global taxonomy as recognized by XBRL International Inc (XII), which is a consortium of regulators, financial standards bodies and technology providers. XBRL is an open standard.
The responsibilities of forming XBRL national jurisdiction and implementation of the standards for financial reporting in India have been entrusted to the Institute of Chartered Accountants of India (ICAI). The Reserve Bank is responsible for implementing the XBRL standard for banks' reporting. Within the Reserve Bank, XBRL implementation is being regularly monitored by a High Level Steering Committee appointed by the Governor.
Currently, besides Form 'A', a statutory return under Sec 42(2) of RBI Act 1934, a return on Gap, Positions and Balances GPB) and a set of returns for monitoring capital adequacy (called RCA-2) have been implemented using XBRL.
Taxonomies used for the three returns have the core taxonomy as Commerce & Industry taxonomy developed by ICAI and have been extended appropriately. Further, the RCA-2 taxonomy is broadly based on CoRep Taxonomy of the European Union and is also in sync with Commerce & Industry taxonomy.