What is the full form of SORP in Banking?

The SORP full form in banking is Statement of Recommended Practice. Banking financial reporting relies on the Statement of Recommended Practice. Regulatory agencies, industry stakeholders, and accountants produced its standards and principles. SORP standardizes, improves, and compares bank financial statements to enable investors, regulators, and the public make better choices. SORP gives banking operations specific guidance on financial reporting, including asset valuation, provisioning, risk management, and transparency. SORP emphasizes accounting for complex financial instruments used in banking.

What Else Should You Know About SORP?

SORP also increases bank financial statement transparency. Transparency helps stakeholders assess a bank’s financial health, risk, and performance. SORP requires banks to report credit, market, liquidity, and operational risk. Information about hazards, risk management techniques, and practices is presented. By providing clear and relevant information, banks assist stakeholders make informed investment, lending, and regulatory decisions. SORP’s asset evaluation and provisioning standards for distressed and NPLs are crucial. NPLs are loans or advances that have ceased earning due to default or financial issues. NPL management is crucial to banks’ profitability and stability. SORP helps banks identify, evaluate, and provision for damaged assets to reflect their true economic value in financial statements. SORP criteria may increase provisioning accuracy and loan portfolio credit risk for banks.