Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) – Amendment Directions, 2026

**Executive Summary** This document contains amendment directions issued by the Reserve Bank of India (RBI) regarding financial statement presentation and disclosures for Local Area Banks (LABs). It mandates specific disclosures related to exposures to related parties. The amendments are effective from April 1, 2026, although banks may choose earlier implementation. **Key Points / Main Content** * **Amendment to Disclosure Requirements:** * Chapter III of the "Disclosure in Financial Statements – Notes to Accounts" is modified. * A new sub-sub paragraph (ix) is inserted under sub-paragraph 10(5) on 'Exposures'. * The new sub-paragraph is titled "Exposures to Related Parties". * **Disclosure Details for Exposures to Related Parties:** * Details of exposures to related parties, as defined in the Reserve Bank of India (Local Area Banks – Credit Risk Management) Directions, 2025, must be disclosed. * The information must be disclosed according to the following table: * Loans to Related Parties * Aggregate value of loans sanctioned to related parties during the year * Aggregate value of outstanding loans to related parties as on 31st March * Aggregate value of outstanding loans to related parties as a proportion of total credit exposure as on 31st March * Aggregate value of outstanding loans to related parties which are categorized as Special Mention Accounts as on 31st March and Non-Performing Assets as on 31st March. * Amount of provisions held in respect of loans to related parties as on 31st March * Contracts and Arrangements Involving Related Parties * Aggregate value of contracts and arrangements awarded to related parties during the year * Aggregate value of outstanding contracts and arrangements involving related parties as on 31st March * **Effective Date:** * The amendments come into force from April 1, 2026. * Banks may implement the amendments in entirety from an earlier date. **Impact Analysis** **Stakeholder: Local Area Banks (LABs)** * **Impact** LABs are required to incorporate the new disclosure requirements related to exposures to related parties in their financial statements. This involves collecting and reporting specific data related to loans, contracts, and arrangements involving related parties. * **Action Required** LABs must update their financial reporting processes and systems to capture and disclose the required information on related party exposures. They should prepare to implement the changes by April 1, 2026, but may choose to adopt them sooner.

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