**Executive Summary**
The Reserve Bank of India (RBI) issued Amendment Directions in 2026 regarding the financial statements of Local Area Banks, specifically concerning presentation and disclosures. These directions modify the existing directions of 2025, mandating new disclosures related to exposures to related parties. The amendments come into force from April 1, 2026, but banks can implement them earlier.
**Key Points / Main Content**
* **Amendment Scope:** Modifies Chapter-III of the ‘Disclosure in Financial Statements – Notes to Accounts' section.
* **Disclosure Requirement:** Mandates the insertion of a new sub-paragraph (ix) under sub-paragraph 10(5) on 'Exposures' requiring disclosure of exposures to related parties.
* **Related Party Disclosure Table:**
* Requires banks to disclose the following details regarding loans to related parties:
* Aggregate value of loans sanctioned during the year.
* Aggregate value of outstanding loans as on 31st March.
* Aggregate value of outstanding loans as a proportion of total credit exposure as on 31st March.
* Aggregate value of outstanding loans categorized as:
* Special Mention Accounts as on 31st March.
* Non-Performing Assets as on 31st March.
* Amount of provisions held in respect of loans as on 31st March.
* Requires banks to disclose the following details regarding contracts and arrangements involving related parties:
* Aggregate value of contracts and arrangements awarded during the year.
* Aggregate value of outstanding contracts and arrangements as on 31st March.
* **Effective Date:** Amendments come into force on April 1, 2026; early adoption is permitted.
**Impact Analysis**
**Stakeholder**: Local Area Banks
**Impact**: Banks need to modify their financial statement reporting to include the new disclosures on exposures to related parties.
**Action Required**: Banks need to update their reporting processes and systems to capture and disclose the required information in their financial statements. Banks must implement the amendments on or after April 1, 2026.
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 for financial statement presentation and disclosures 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, relating to financial statement presentation and disclosures of local area banks.
Banking Regulation Act, 1949: The act under which the powers are conferred to Reserve bank of India, to formulate these directions
Reserve Bank of India (Local Area Banks – Credit Risk Management) – Amendment Directions, 2026: Another set of directions related to credit risk management for local area banks issued by the Reserve Bank of India.
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