With regard to exchange rate, it was in August 1994 that the rupee was made fully convertible on current account. These reforms allowed increased integration between domestic and international markets and created a need to manage interest rate and currency risks.
Disclosures would not only provide more qualitative and quantitative information about the firm’s current risk exposure to the market but also help the market assess the quality of the risk oversight and risk appetite of the organization. Less than fully transparent disclosures are not limited to “complex” off-balance-sheet transactions. One glaring example is the treatment of expenses associated with defined-benefit pension plans.