**Executive Summary**
The Reserve Bank of India (RBI) issues Amendment Directions, effective April 1, 2026, modifying disclosure requirements for Local Area Banks (LABs) regarding financial statements, specifically concerning exposures to related parties. These directions, issued under the Banking Regulation Act of 1949, mandate LABs to disclose details of their exposures to related parties as defined in prior Credit Risk Management Directions. Banks may implement these amendments prior to April 1, 2026.
**Key Points / Main Content**
* **Amendment Scope:** The document amends the "Disclosure in Financial Statements – Notes to Accounts" section of the RBI's directions to LABs.
* **Disclosure Requirement:** A new sub-sub paragraph (ix) is inserted under sub-paragraph 10(5) on 'Exposures', requiring specific disclosures related to exposures to related parties.
* **Related Party Exposure Details:** Banks must disclose details of exposures to related parties as defined in the Reserve Bank of India (Local Area Banks – Credit Risk Management) Directions, 2025, in the following format:
* **A. 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 categorized as:
* Special Mention Accounts as on 31st March.
* Non-Performing Assets as on 31st March.
* Amount of provisions held in respect of loans to related parties as on 31st March.
* **B. 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 have the option to implement the amendments earlier.
**Impact Analysis**
**Stakeholder: Local Area Banks (LABs)**
* **Impact:** LABs must comply with the new disclosure requirements when preparing their financial statements.
* **Action Required:** LABs must update their financial reporting processes and systems to capture and disclose the required information on exposures to related parties. They must implement these changes by April 1, 2026, or sooner if desired.
Key Entities Referenced
Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) – Amendment Directions, 2026: The primary subject of the document: amendment directions related to financial statements of local area banks.
Reserve Bank of India (Local Area Banks - Financial Statements: Presentation and Disclosures) Directions, 2025: The directions being amended by the current document.
Banking Regulation Act, 1949: The Act that provides the legal basis for the directions.
Reserve Bank of India (Local Area Banks – Credit Risk Management) – Amendment Directions, 2026: Directions that triggered the review leading to the financial statement amendments.
Reserve Bank of India (Local Area Banks – Credit Risk Management) Directions, 2025: Reference to related party definitions as they are defined in these directions.
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
RBI/2025-26/183
DOR.CRE.REC.385/21-04-018/2025-26 January 05, 2026
Reserve Bank of India (Local Area Banks – Financial Statements:
Presentation and Disclosures) – Amendment Directions, 2026
Please refer to Reserve Bank of India (Local Area Banks - Financial Statements:
Presentation and Disclosures) Directions, 2025 (hereinafter referred to as ‘the
Directions’).
2. On a review, consequent to the issuance of the Reserve Bank of India (Local Area
Banks – Credit Risk Management) – Amendment Directions, 2026, and in exercise of
the powers conferred by the sections 21 and 35A of the Banking Regulation Act, 1949
and all other provisions / laws enabling the Reserve Bank of India (hereinafter called
the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary
and expedient in the public interest so to do, hereby issues the Amendment Directions
hereinafter specified.
3. The Amendment Directions modifies the Directions as under:
3(1) In Chapter-III ‘Disclosure in Financial Statements – Notes to Accounts’, a new
sub-sub paragraph (ix) shall be inserted under sub-paragraph 10(5) on ‘Exposures’,
as given below:
10(5)(ix) Exposures to Related Parties
Details of exposures to related parties as defined in Reserve Bank of India
(Local Area Banks – Credit Risk Management) Directions, 2025 shall be
disclosed as per the following table:
(Amount in ₹ crore)
Sl Particulars Previous Current
No.
Year Year
A. Loans to Related PartiesReserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) – Amendment Directions, 2026
1 Aggregate value of loans sanctioned to related
parties during the year
2 Aggregate value of outstanding loans to related
parties as on 31st March
3 Aggregate value of outstanding loans to related
parties as a proportion of total credit exposure as
on 31st March
4 Aggregate value of outstanding loans to related
parties which are categorized as:
(i) Special Mention Accounts as on 31st March
(ii) Non-Performing Assets as on 31st March
5 Amount of provisions held in respect of loans to
related parties as on 31st March
B. Contracts and Arrangements involving Related Parties
6 Aggregate value of contracts and arrangements
awarded to related parties during the year
7 Aggregate value of outstanding contracts and
arrangements involving related parties as on 31st
March
4. The above amendments shall come into force from April 1, 2026. Banks may
however decide to implement the amendments in entirety from an earlier date.
Vaibhav Chaturvedi
(Chief General Manager)
2