With XBRL, the ministry of corporate affairs will be able to monitor the growth of subsidiaries of companies as all financial statements will be tagged under a single head, an official in the ministry said, requesting anonymity.

The new format will not only enable better organisation of data in standardised formats, but will also help detect fraudulent entries and calculations. It will be particularly useful in cases where companies have subsidiaries, which in turn have auxiliary units.

In India, the Securities and Exchange Board of India and the RBI are using this tool as part of their regulatory filings. In the US, the Securities Exchange Commission is mandating its use.

At present, the Registrar of Companies manually checks the annual reports of companies to see how they are operating their structures. The process is daunting in the face of inadequate resources and the registrar's authority is seldom put to effective use.

The draft Companies Bill has sought discretionary powers for the government to stop firms from establishing multiple layers of subsidiaries if they are found abusing this right.

The law, at present, allows firms to establish any number of subsidiaries, which in turn can set up their own subsidiaries. The corporate affairs ministry had earlier proposed a cap on the number of layers of subsidiaries a company could set up, but it was forced to dilute its stand following lobbying. The latest draft of the Bill introduced the clause on discretionary powers for the government on recommendations of the Parliamentary Standing Committee on Finance.