RBI/DOR/2025-26/314
DOR.ACC.REC.No.233/21.04.018/2025-26

November 28, 2025

Reserve Bank of India (Rural Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025

In exercise of the powers conferred by Section 35A read with Section 56 of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.

Chapter-I Preliminary

A. Short title and commencement

1. These Directions shall be called the Reserve Bank of India (Rural Co-operative Banks - Financial Statements: Presentation and Disclosures) Directions, 2025.

2. These Directions shall come into effect on the day these are placed on the official website of the Reserve Bank of India.

B. Applicability

3. These Directions shall be applicable to Rural Co-operative Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank').

In this context, ‘Rural Co-operative Banks (RCBs)’ shall mean State Co-operative Banks and Central Co-operative Banks, as defined in the National Bank for Agriculture and Rural Development Act, 1981.

Chapter-II Balance sheet and Profit and Loss account

A. Format of the balance sheet and profit and loss account

4. In terms of the provisions of Section 29 read with Section 56 of the Banking Regulation Act, 1949 (BR Act, 1949), a RCB shall in respect of all business transacted by it prepare a Balance Sheet and Profit and Loss Account as on the last working day of the year or the period, as the case may be, in the Forms set out in the Third Schedule of the BR Act, 1949 as substituted by clause (zl) of Section 56 of the said Act.

B. Notes and instructions for compilation

5. A bank shall be guided by the announcements of the Institute of Chartered Accountants of India (ICAI) regarding applicability of Accounting Standards, subject to Directions/ Guidelines issued by the Reserve Bank of India. As per prevailing pronouncements of the ICAI, co-operative banks are classified as Level I enterprises. Level I enterprises are required to comply with all the accounting standards.

Note: Mere mention of an activity, transaction or item in the Directions does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity or transaction.

C. Guidance on specific issues with respect to certain Accounting Standards

6. A bank shall also be guided by following with respect to relevant issues in the application of certain Accounting Standards for the bank.

(1) Accounting Standard 5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

The objective of this standard is to prescribe the classification and disclosure of certain items in the statement of profit and loss so that all enterprises prepare and present such a statement on a uniform basis.

(i) Accordingly, this Standard requires the classification and disclosure of extraordinary and prior period items, and the disclosure of certain items within profit or loss from ordinary activities. It also specifies the accounting treatment for changes in accounting estimates and the disclosures to be made in the financial statements regarding changes in accounting policies.

(ii) Paragraph 4.3 of Preface to the Statements on Accounting Standards issued by the ICAI states that Accounting Standards are intended to apply only to items which are material. Since materiality is not objectively defined, it has been decided that a bank shall ensure compliance with the provisions of the Accounting Standard in respect of any item of prior period income or prior period expenditure which exceeds one per cent of the total income / total expenditure of the bank if the income / expenditure is reckoned on a gross basis or one per cent of the net profit before taxes or net losses as the case may be if the income is reckoned net of costs.

(iii) Since the format of the profit and loss accounts of a bank prescribed in Form B under Third Schedule to the BR Act, 1949, does not specifically provide for disclosure of the impact of prior period items on the current year’s profit and loss, such disclosures, wherever warranted, may be made in the ‘Notes on Accounts’ to the balance sheet of a bank.

(2) Accounting Standard 9 – Revenue Recognition

(i) Non-recognition of income by the bank in case of non-performing advances and non-performing investments, in compliance with the regulatory prescriptions of the Reserve Bank of India, shall not attract a qualification by the statutory auditors as this would be in conformity with provisions of the standard, as it recognises postponement of recognition of revenue where collectability of the revenue is significantly uncertain.

(3) Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates

(i) AS 11 is applied in the context of the accounting for transactions in foreign currencies. The issues that arise in this context have been identified and banks shall be guided by the following while complying with the provisions of the Standard:

(ii) Exchange rate for recording foreign currency transactions: As per paragraphs 9 and 21 of the Standard, a foreign currency transaction shall be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. A bank may face difficulty in applying the exchange rate prevailing at the date of the transaction in respect of the items which are not being recorded in Indian Rupees or are currently being recorded using a notional exchange rate.

(iii) A bank, which is in a position to apply the exchange rate prevailing on the date of the transaction for recording the foreign currency transactions as required under AS 11 shall comply with the requirements. A bank, which has an extensive branch network, have a high volume of foreign currency transactions and is not fully equipped on the technology front shall be guided by the following:

• (a) Paragraph 10 of the Standard allows, for practical reasons, the use of a rate that approximates the actual rate at the date of the transaction. The Standard also states that if exchange rates fluctuate significantly, the use of average rate for a period is unreliable. Since the enterprises are required to record the transactions at the date of the occurrence thereof, the weekly average closing rate of the preceding week can be used for recording the transactions occurring in the relevant week, if the same approximates the actual rate at the date of the transaction. In view of the practical difficulties which a bank may have in applying the exchange rates at the dates of the transactions and since the Standard allows the use of a rate that approximates the actual rate at the date of the transaction, the bank may use average rates as detailed below:

• (b) FEDAI publishes a weekly average closing rate at the end of each week, and a quarterly average closing rate at the end of each quarter for various currencies.

• (c) In respect of, those foreign currency transactions, which are currently not being recorded in Indian Rupees at the date of the transaction or are being recorded using a notional exchange rate shall now be recorded at the date of the transaction by using theweekly average closing rate of the preceding week, published by FEDAI, if the same approximates the actual rate at the date of the transaction.

• (d) If the weekly average closing rate of the preceding week does not approximate the actual rate at the date of the transaction, the closing rate at the date of the transaction shall be used. For this purpose, the weekly average closing rate of the preceding week would not be considered approximating the actual rate at the date of the transaction if the difference between (A) the weekly average closing rate of the preceding week, and (B) the exchange rate prevailing at the date of the transaction, ismore than three and a half per centof (B).

• (e) A bank is encouraged to equip itself to record the foreign currency transactions at the exchange rate prevailing on the date of the transaction.

(iv) Closing rate

• (a) Paragraph 7 of the Standard defines ‘Closing rate’ as the exchange rate at the balance sheet date. To ensure uniformity among banks, closing rate to be applied for the purposes of AS 11 (revised 2003) for the relevant accounting period shall be the lastclosing spot rateof exchange announced by FEDAI for that accounting period.

(4) Accounting Standard 17 – Segment Reporting

The indicative formats for disclosure under ‘AS 17 – Segment Reporting’ are as below.

Note:

a) The business segments will be ‘Treasury’, ‘Corporate / Wholesale Banking’, ‘Retail Banking’, and ‘Other banking operations’.

b) A bank shall adopt its own methods, on a reasonable and consistent basis, for allocation of expenditure among the segments.

c) ‘Treasury’ shall include the entire investment portfolio.

d) Retail Banking shall include exposures which fulfil the four criteria of orientation, product, granularity, and low value of individual exposures for retail exposures laid down in the Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Directions, 2025. Individual housing loans will also form part of Retail Banking segment for the purpose of reporting under AS-17.

e) Corporate / Wholesale Banking includes all advances to trusts, partnership firms, companies, and statutory bodies, which are not included under ‘Retail Banking’.

f) Other Banking Business includes all other banking operations not covered under ‘Treasury, 'Wholesale Banking', and 'Retail Banking' segments. It shall also include all other residual operations such as para-banking transactions / activities.

g) Besides the above-mentioned segments, a bank shall report additional segments within ‘Other Banking Business’ which meet the quantitative criterion prescribed in the AS 17 for identifying reportable segments.

(5) Accounting Standard 18 – Related Party Disclosures

The manner of disclosures required by paragraphs 23 to 26 of AS 18 is illustrated as below. It may be noted that the format given below is merely illustrative in nature and is not exhaustive.

Note: No disclosure need be made in the shaded portion

Note:

a) The business segments will be ‘Treasury’, ‘Corporate / Wholesale Banking’, ‘Retail Banking’, and ‘Other banking operations’.

b) A bank shall adopt its own methods, on a reasonable and consistent basis, for allocation of expenditure among the segments.

c) ‘Treasury’ shall include the entire investment portfolio.

d) Retail Banking shall include exposures which fulfil the four criteria of orientation, product, granularity, and low value of individual exposures for retail exposures laid down in the Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Directions, 2025. Individual housing loans will also form part of Retail Banking segment for the purpose of reporting under AS-17.

e) Corporate / Wholesale Banking includes all advances to trusts, partnership firms, companies, and statutory bodies, which are not included under ‘Retail Banking’.

f) Other Banking Business includes all other banking operations not covered under ‘Treasury, 'Wholesale Banking', and 'Retail Banking' segments. It shall also include all other residual operations such as para-banking transactions / activities.

g) Besides the above-mentioned segments, a bank shall report additional segments within ‘Other Banking Business’ which meet the quantitative criterion prescribed in the AS 17 for identifying reportable segments.

(5) Accounting Standard 18 – Related Party Disclosures

The manner of disclosures required by paragraphs 23 to 26 of AS 18 is illustrated as below. It may be noted that the format given below is merely illustrative in nature and is not exhaustive.

Note:

i) Related parties for a bank are its parents, subsidiaries, associates / joint ventures, Key Management Personnel (KMP), and relatives of KMP. KMP are the whole-time directors for an Indian bank. Relatives of KMP would be on the lines indicated in Section 45S of the RBI Act, 1934

ii) The name and nature of related party relationship shall be disclosed, irrespective of whether there have been transactions, where control exists within the meaning of the Standard. Control would normally exist in case of parent-subsidiary relationship. The disclosures may be limited to aggregate for each of the above related party categories and would pertain to the year-end position as also the maximum position during the year.

iii) Secrecy provisions: If in any of the above category of related parties there is only one related party entity, any disclosure would tantamount to infringement of customer confidentiality. In terms of AS 18, the disclosure requirements do not apply in circumstances when providing such disclosures would conflict with the reporting enterprise’s duties of confidentiality as specifically required in terms of statute, by regulator or similar competent authority. Further, in case a statute or regulator governing an enterprise prohibits the enterprise from disclosing certain information, which is required to be disclosed, non-disclosure of such information would not be deemed as non-compliance with the Accounting Standards. On account of the judicially recognised common law duty of a bank to maintain the confidentiality of the customer details, it need not make such disclosures. In view of the above, where the disclosures under the Accounting Standards are not aggregated disclosures in respect of any category of related party, i.e., where there is only one entity in any category of related party, a bank need not disclose any details pertaining to that related party other than the relationship with that related party.

(6) Accounting Standard 23 – Accounting for Investments in Associates in CFS

(a) This Accounting Standard sets out principles and procedures for recognising, in the Consolidated Financial Statements (CFS), the effects of the investments in associates on the financial position and operating results of a group.

(b) The Standard requires that an investment in an associate shall be accounted for in CFS under the equity method subject to certain exceptions.

(c) The term ‘associate’ is defined as an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture of the investor.

(d) ‘Significant influence’ is the power to participate in the financial and / or operating policy decisions of the investee but not control over those policies. Such an influence may be gained by share ownership, statute or agreement.

(e) As regards share ownership, if an investor holds, directly or indirectly through subsidiaries 20 percent or more of the voting power of the investee, it is presumed that the investor has significant influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the investor holds, directly or indirectly through subsidiaries less than 20 percent of the voting power of the investee, it is presumed that the investor does not have significant influence, unless such influence can be clearly demonstrated. A substantial or majority ownership by another investor does not necessarily preclude an investor from having significant influence.

(f) The issue is whether conversion of debt into equity in an enterprise by a bank by virtue of which the bank holds more than 20 percent will result in an investor-associate relationship for the purpose of AS 23. From the above it is clear that though a bank may acquire more than 20 percent of voting power in the borrower entity in satisfaction of its advances it may be able to demonstrate that it does not have the power to exercise significant influence since the rights exercised by it are protective in nature and not participative. In such a circumstance, such investment may not be treated as investment in associate under this Accounting Standard. Hence, the test shall not be merely the proportion of investment but the intention to acquire the power to exercise significant influence.

(7) Accounting Standard 24 - Discontinuing operations

(i) This Standard establishes principles for reporting information about discontinuing operations. Merger / closure of branches of a bank by transferring the assets / liabilities to the other branches of the same bank may not be deemed as a discontinuing operation and hence this Accounting Standard will not be applicable to merger / closure of branches of a bank by transferring the assets / liabilities to the other branches of the same bank.

(ii) Disclosures shall be required under the Standard only when:

• (a) discontinuing of the operation has resulted in shedding of liability and realisation of the assets by the bank or decision to discontinue an operation which will have the above effect has been finalised by the bank, and

• (b) the discontinued operation is substantial in its entirety.

(8) Accounting Standard 25 – Interim Financial Reporting

(i) This Standard prescribes the minimum content of an interim financial report and the principles for recognition and measurement in a complete or condensed financial statements for an interim period.

(9) Accounting Standard 26 – Intangible asset

(i) This Standard prescribes the accounting treatment for intangible assets that are not dealt with specifically in another Accounting Standard. With respect to computer software which has been customised for the bank’s use and is expected to be in use for some time, the detailed recognition and amortisation principle in respect of computer software prescribed in the Standard adequately addresses these issues and may be followed by the bank.

(ii) It may be noted that intangible assets recognised and carried in the balance sheet of a bank in compliance with AS 26 shall attract provisions of Section 15(1) of the BR Act 1949, in terms of which a bank is prohibited from declaring any dividend until any expenditure not represented by tangible assets is carried in the balance sheet.

(iii) A bank desirous of paying dividend while carrying any intangible assets in its books must seek exemption from Section 15(1) of the BR Act, 1949 from the Central Government.

(10) Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

(i) This Standard is applied in accounting for interests in joint ventures and the reporting of joint venture assets, liabilities, income, and expenses in the financial statements of ventures and investors, regardless of the structures or forms under which the joint venture activities take place.

(ii) This Standard identifies three broad types of joint ventures, namely, jointly controlled operations, jointly controlled assets, and jointly controlled entities.

(iii) In case of jointly controlled entities, where a bank is required to present CFS, the investment in joint ventures shall be accounted for as per provisions of this Standard. In respect of joint ventures in the form of jointly controlled operations and jointly controlled assets, this Accounting Standard is applicable for both solo financial statements as well as CFS.

(iv) It is clarified that though paragraph 26 of the Accounting Standard prescribes that for the purpose of solo financial statements, investment in jointly controlled entities is to be accounted as per AS 13, such investment is to be reflected in the solo financial statements of the bank as per guidelines prescribed by RBI since AS 13 does not apply to banks.

(11) Accounting Standard 28 – Impairment of assets

(i) This Standard prescribes the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. It is clarified that the Standard shall not apply to inventories, investments, and other financial assets such as loans and advances and shall generally be applicable to a bank in so far as it relates to fixed assets.

(ii) The Standard shall generally apply to financial lease assets and non-banking assets acquired in settlement of claims only when the indications of impairment of the entity are evident.

Chapter-III Disclosure in Financial Statements – Notes to Accounts

7. A bank shall disclose information as specified inthis chapter in the ‘Notes to Accounts’ of the financial statements.

Explanation 1: These disclosures are intended only to supplement and not to replace disclosure requirements under other laws, regulations, or accounting and financial reporting standards.

Explanation 2: A bank is encouraged to make disclosures that are more comprehensive than the minimum required under these Directions, especially if such disclosures significantly aid in the understanding of the financial position and performance.

A. General

8. The items listed in these Directions shall be disclosed in the ‘Notes to Accounts’ to the financial statements. A bank shall make additional disclosures where material.

B. Presentation

9. In addition to the Schedules to the balance sheet, a summary of ‘significant accounting policies’ and ‘Notes to Accounts’ shall be disclosed as separate Schedules.

C. Disclosure requirements

10. A bank shall, at the minimum, furnish the following information in the ‘Notes to Accounts’. The bank shall note that mere mention of an activity, transaction, or item in the disclosure template does not imply that it is permitted, and the bank shall refer to the extant statutory and regulatory requirements while determining the permissibility or otherwise of an activity or transaction. The bank shall disclose comparative information in respect of the previous period for all amounts reported in the current period’s financial statements. Further, the bank shall include comparative information for narrative and descriptive information if it is relevant to understanding the current period’s financial statements.

(1) Regulatory capital

(i) Composition of regulatory capital

* Example: A bank may disclose as under

**Example: A bank may disclose as under:

(ii) Draw down from Reserves

(a) Suitable disclosures mentioning the amount and the rationale for withdrawal shall be made regarding any draw down from reserves.

(2) Asset liability management

(i) Maturity pattern of certain items of assets and liabilities

Note: A bank shall be guided by the Reserve Bank of India (Rural Co-operative Banks – Asset Liability Management) Directions, 2025 , as amended from time to time. 

(3) Investments

(i) Composition of Investment Portfolio

(ii) Movement of provisions for depreciation on investments, non-performing investments (NPIs) and investment fluctuation reserve (IFR)

(iii) Sale and transfers to / from Permanent category

In case of transfers of securities to/from permanent category, an RCB shall make disclosure in the ‘Notes to Accounts’ to the Financial Statements.

(iv) Non-SLR investment portfolio

(a) Non-performing non-SLR investments

(b) Issuer composition of non-SLR investments

(v) Repo transactions (in face value and market value terms)

(vi) Government Security Lending (GSL) transactions (in market value terms

As at … (current year balance sheet date)

As at … (previous year balance sheet date)

(4) Asset quality

(i) Classification of advances and provisions held

(ii) Sector-wise advances and Gross NPAs

(iii) Overseas assets, NPAs and revenue

(iv) Details of accounts subjected to restructuring (as defined as per applicable regulations)

(v) Disclosure of transfer of loan exposure

A bank shall make appropriate disclosures in its financial statements, under ‘Notes to Accounts’, relating to the total amount of loans not in default / stressed loans transferred and acquired to / from other entities as prescribed below, on a quarterly basis:

(a) In respect of loans not in default that are transferred or acquired, the disclosures shall cover, inter alia, aspects such as weighted average maturity, weighted average holding period, retention of beneficial economic interest, coverage of tangible security coverage, and rating-wise distribution of rated loans. Specifically, a transferor shall disclose all instances where it has agreed to replace loans transferred to transferee(s) or pay damages arising out of any representation or warranty. The disclosures shall also provide break-up of loans transferred / acquired through assignment / novation and loan participation.

(b) In the case of stressed loans transferred or acquired, the following disclosures shall be made:

(c) The transferor(s) shall also make appropriate disclosures with regard to the quantum of excess provisions reversed to the profit and loss account on account of sale of stressed loans. Also, the lender shall disclose the distribution of the SRs held by them across the various categories of Recovery Ratings assigned to such SRs by the credit rating agencies.

Note: While making disclosures in audited annual financial statements, a bank should invariably provide the figures for both the current and previous year to facilitate comparison.

(vi) Non – Fund Based Credit Facilities A bank shall disclose the details of NFB credit facilities in the format given below.

Note: As regards NFB credit limits, the bank shall be guided by the Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Directions, 2025, as amended from time to time. These Directions shall come into force from April 1, 2026, or from any earlier date as decided by a bank as per its internal policy (“effective date”). Extension of any new NFB facility and renewal of an existing NFB facility after the effective date, shall be governed in terms of these Directions. All existing NFB facilities extended/ renewed till the effective date shall be governed by the existing instructions as applicable to the respective bank.

(vii) Fraud accounts

A bank shall disclose details on the number and amount of frauds as well as the provisioning thereon as per template given below.

(viii) Disclosure under resolution framework for COVID-19-related Stress

A special window under the Prudential Framework was extended to enable the lenders to implement a resolution plan in respect of eligible corporate exposures, and personal loans, while classifying such exposures as Standard. A bank shall make disclosures in the format prescribed below every half-year, i.e., in the financial statements as on September 30 and March 31, starting from the half-year ending September 30, 2021 till all exposures on which resolution plan was implemented are either fully extinguished or completely slip into NPA, whichever is earlier.

Format for disclosures to be made half yearly starting September 30, 2021

Note: A bank that is not required by the listing requirements or otherwise to publish quarterly / half-yearly statements, shall make the disclosures for the full year in the annual financial statements.

(5) Exposures

(i) Exposure to real estate sector

(ii) Exposure to capital market

(iii) Risk category-wise country exposure

Note: If a bank has no exposure to country risk in both the current and previous year, it may omit disclosure of the table while mentioning that it has no exposure to country risk.

(iv) Unsecured advances

A bank shall disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. have been taken as also the estimated value of such intangible collateral as per the following format.

(v) Factoring exposures

Factoring exposures shall be separately disclosed.

(vi) Exposure of Rural Co-operative Banks

A bank shall disclose details of its exposure as per the template specified below:

(a) State Co-operative Banks

(b) Central Co-operative Banks

(vii) Loans against gold and silver collateral

(a) Details of loans extended against eligible gold and silver collateral

(b) Details of gold and silver collateral and auctions

(6) Concentration of deposits, advances, exposures and NPAs

(i) Concentration of deposits

(ii) Concentration of advances*

*Advances shall be computed based on credit exposure, i.e., funded and non-funded limits including derivative exposures where applicable. The sanctioned limits or outstanding, whichever are higher, shall be reckoned. However, in the case of fully drawn term loans, where there is no scope for redrawal of any portion of the sanctioned limit, a bank may reckon the outstanding as the credit exposure

(iii) Concentration of exposures**

**Exposures shall be computed as per applicable RBI regulation.

(iv) Concentration of NPAs

(7) Derivatives

Note: A bank that has not entered into any derivative transactions, both in the current and previous year may omit these disclosures and instead disclose that it has not entered into any transactions in derivatives in the current and previous years.

(i) Forward rate agreement / Interest rate swap

(ii) Exchange traded interest rate derivatives

(iii) Disclosures on risk exposure in derivatives

(a) Qualitative disclosures

• (i) A bank shall disclose its risk management policies pertaining to derivatives with particular reference to the extent to which derivatives are used, the associated risks and business purposes served. The disclosure shall also include:

• (ii) the structure and organisation for management of risk in derivatives trading,

• (iii) the scope and nature of risk measurement, risk reporting and risk monitoring systems,

• (iv) policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges / mitigants, and

• (v) accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.

(b) Quantitative disclosures

(8) Transfers to Depositor Education and Awareness Fund (DEA Fund)

(9) Disclosure of complaints

(i) Summary information on complaints received by a bank from customers and from the Offices of Ombudsman (previously office of banking ombudsman)

(ii) Top five grounds of complaints received by the bank from customers

Note: As per Master List for identifying grounds of complaints as provided in Appendix 1 to circular CEPD.CO.PRD.Cir.No.01/13.01.013/2020-21 dated January 27, 2021 on ‘Strengthening the Grievance Redress Mechanism of Banks’.

(10) Disclosure of penalties imposed by the Reserve Bank of India

• (i) Penalties imposed by the Reserve Bank of India under the provisions of the (i) BR Act, 1949, (ii) Payment and Settlement Systems Act, 2007, and (iii) Government Securities Act, 2006 (for bouncing of SGL) shall be disclosed in the ‘Notes to Accounts’ to the balance sheet in the concerned bank’s next Annual Report. 

• (ii) A bank shall make appropriate disclosures on the nature of the breach, number of instances of default and the quantum of penalty imposed.

• (iii) The defaulting participant in a reverse repo transaction shall make appropriate disclosure on the number of instances of default as well as the quantum of penalty paid to the Reserve Bank of India during the financial year.

(11) Other Disclosures

(i) Business ratios

(ii) Bancassurance business

The details of fees / brokerage earned in respect of insurance broking, agency, and bancassurance business undertaken by a bank shall be disclosed for both the current year and previous year.

(iii) Marketing and distribution

A bank shall disclose the details of fees / remuneration received in respect of the marketing and distribution function (excluding bancassurance business) undertaken by it.

(iv) Provisions and contingencies

(v) Payment of DICGC Insurance Premium

(vi) Disclosure of facilities granted to directors and their relatives

A bank shall disclose any fund or non-fund (guarantees, letters of credit, etc.) facilities extended to directors, their relatives, companies or firms in which they are interested.

Chapter-IV Other Instructions

A. Inter-branch account - provisioning for net debit balance

11. A bank shall adhere to following guidelines for unreconciled inter-branch account entries.

(1) The bank shall segregate the credit entries outstanding for more than five years in the inter-branch account and transfer them to a separate ‘Blocked Account’ which shall be shown under ‘Other Liabilities - Suspense’.

(2) Any adjustment from the Blocked Account shall be permitted only with the authorisation of two officials, one of whom should be from the Controlling / Head Office if the amount exceeds ₹ One lakh.

(3) The balance in Blocked Account shall be reckoned as a liability for the purpose of the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

(4) The bank shall maintain category-wise (head-wise) accounts for various types of transactions put through inter-branch accounts, so that the netting can be done category-wise. As on the balance sheet date, the bank shall segregate the debit and credit entries remaining unreconciled for more than six months and arrive at the net position category-wise, while also considering the balance in the Blocked Account.

(5) The net debit under all the categories of inter-branch accounts shall be aggregated and a provision equivalent to 100 per cent of the aggregate net debit shall be made.

Provided that the bank shall ensure that the net debit in one category is not set-off against net credit in another category.

B. Reconciliation of Nostro account and treatment of outstanding entries

12. Treatment of outstanding entries in Nostro accounts shall of a bank shall be as under.

(1) The bank shall take steps to have a strong control over reconciliation and put in place a system of real-time reconciliation, which provides for immediate escalation of differences, if any.

(2) There shall be close monitoring of pending items in Nostro accounts by top management at short intervals.

(3) All unreconciled credit entries in Nostro accounts which are outstanding for more than three years shall be transferred to a Blocked Account and shown as outstanding liabilities.

(4) The balance in the Blocked Account shall be reckoned for the purpose of CRR / SLR.

(5) A bank shall make 100 per cent provision in respect of all unreconciled debit entries in the Nostro accounts, which are outstanding for more than two years.

C. Transfer to / appropriation from Reserve funds

13. In terms of Sections 17(1) and 56 of the BR Act, 1949 a bank is required to transfer, out of the balance of profit as disclosed in the profit and loss account, a sum equivalent to not less than 20 per cent of such profit to Reserve Fund.

14. Unless specifically allowed by extant regulations, the bank shall take prior approval from the Reserve Bank of India before any appropriation is made from the Statutory Reserve or any other reserve.

15. A bank is further advised that:

(1) all expenses including provisions and write-offs recognised in a period, whether mandatory or prudential, shall be reflected in the profit and loss account for the period as an ‘above the line’ item (i.e., before arriving at the net profit / loss for the year);

(2) draw down from reserves, with the prior approval of Reserve Bank of India, shall be effected only ‘below the line’ (i.e., after arriving at the net profit / loss for the year); and

(3) suitable disclosures shall be made of such draw down in the ‘Notes on Accounts’ to the Balance Sheet.

(4) subject to compliance with applicable laws, a bank, without prior approval of Reserve Bank of India, can utilise the share premium account for meeting issue expenses of shares to the extent that such expenses are incremental costs directly attributable to the transaction that otherwise would have been avoided.

Provided that the share premium account shall not be utilised for writing off the expenses relating to the issue of debt instruments.

Explanation: For the purposes of this Direction, issue expenses shall include registration and other regulatory fees, payments made to legal, accounting, and other professional advisers, printing costs, and stamp duties.

D. Provisioning for fraud

16. In respect of provisioning for frauds, a bank that has reported the fraud within the prescribed time shall have the option to make the provision for the same over a period, not exceeding four quarters, commencing from the quarter in which the fraud has been detected.

17. Where the bank chooses to provide for the fraud over two to four quarters and this results in the full provisioning being made in more than one financial year, subject to compliance with applicable laws, it may debit reserves other than the Statutory Reserve by the amount remaining un-provided at the end of the financial year by credit to provisions.

Provided that it shall subsequently proportionately reverse the debits to the reserves and complete the provisioning by debiting profit and loss account, in the successive quarters of the next financial year.

18. Where there has been delay, beyond the prescribed period, in reporting the fraud to the Reserve Bank, the entire provisioning is required to be made at once.

E. Unreconciled balances

19. Unreconciled credit balances in any transitory account representing unclaimed balances shall not be transferred to the profit and loss account or to any reserves.

F. Deferred tax liability (DTL) on Special Reserve created under Section 36(1) (viii) of the Income Tax Act, 1961

20. A bank shall make provisions for DTL on the Special Reserve created under Section 36(1)(viii) of Income Tax Act, 1961.

G. Payment of Fees and allowances to Directors

21. All expenses on the conduct of Board meetings shall be shown against item 3 of Profit and Loss Account, i.e., ‘Directors and Local Committee Members-Fees and Allowances”. Such expenses would include amounts actually paid to the directors and Local Committee members as also amounts spent on their behalf for attending such meetings.

H. Window dressing

21. A bank shall ensure that balance sheet and profit and loss account reflect true and fair picture of its financial position.

22. Instances of window dressing of financials, short provisioning, misclassification of NPAs, under-reporting / incorrect computation of exposure / risk weight, incorrect capitalisation of expenses, capitalisation of interest on NPAs, deliberate inflation of asset and liabilities at the end of the financial year and subsequent reversal immediately in next financial year, etc., shall be viewed seriously and appropriate penal action in terms of the provisions of the BR Act, 1949, shall be considered.

Chapter-V Repeal and Other Provisions

A. Repeal and saving

23. With the issue of these Directions, the existing Directions, instructions, and guidelines relating to Financial Statements – Presentation and Disclosures as applicable to Rural Co-operative Banks stands repealed, as communicated vide circular DOR.RRC.REC.302/33-01-010/2025-26 dated November 28, 2025. The Directions, instructions, and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed.

24. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these directions, instructions, or guidelines shall not in any way prejudicially affect:

• a. any right, obligation or liability acquired, accrued, or incurred thereunder;

• b. any penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder;

• c. any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions, instructions, or guidelines had not been repealed.

B. Application of other laws not barred

25. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations or directions, for the time being in force.

C. Interpretations

26. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the RBI may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the RBI shall be final and binding.

(Sunil T S Nair)
Chief General Manager