RBI master-direction RBI/DOR/2025-26/241 · 28 Nov 2025
Official title
Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 (Updated as on May 18, 2026)
Summary
Check the official recordThe Reserve Bank of India issued these Directions to govern the preparation, presentation, and disclosure of financial statements for Local Area Banks. Banks must prepare balance sheets and profit and loss accounts in the formats specified in the Third Schedule of the Banking Regulation Act, 1949. The Directions mandate compliance with notified Accounting Standards, subject to RBI guidelines. Banks must disclose specific regulatory capital, asset quality, investment portfolios, and risk management information in the Notes to Accounts. The Directions also establish requirements for provisioning, reconciliation of inter-branch and Nostro accounts, and appropriation of reserves. These rules apply to all Local Area Banks with immediate effect, replacing previous instructions on this subject.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/241 DOR.ACC.REC.No.160/21.04.018/2025-26 November 28, 2025
Previous Versions
Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 (Updated as on May 18, 2026)
Table of Contents
Chapter-I Preliminary A. Short title and commencement B. Applicability
Chapter-II Balance Sheet and Profit and Loss Account A. Format of the Balance Sheet and Profit and Loss Account B. Notes and instructions for compilation C. Guidance on specific issues with respect to certain Accounting Standards
Chapter-III Disclosure in financial statements – Notes to Accounts A. General B. Presentation C. Disclosure requirements
Chapter-IV Other instructions A. Inter - branch account – provisioning for net debit balance B. Reconciliation of Nostro account and treatment of outstanding entries C. Transfer to / appropriation from Reserve funds D. Provisioning for fraud E. Unreconciled balances F. Deferred tax liability (DTL) on Special Reserve created under Section 36(1) (viii) of the Income Tax Act, 1961 G. Window dressing
Chapter-V Repeal and Other Provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations
Annex I
In exercise of the powers conferred by Section 35A 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.
These Directions shall be called the Reserve Bank of India (Local Area Banks – Financial Statements: Presentation and Disclosures) Directions, 2025.
These Directions shall come into force with immediate effect.
Note: Mere mention of an activity, transaction, or item in instructions for compilation 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.
(1) Instructions for compilation of balance sheet
| Item | Sch | Coverage | Notes and instructions for compilation |
|---|---|---|---|
| Capital | 1 | Nationalised Banks Capital (Fully owned by Central Government) | Authorised, Issued, Subscribed, and Called-up capital shall be given separately. Calls in arrears will be deducted from Called-up capital while the paid-up value of forfeited shares shall be added thus arriving at the Paid-up capital. Where necessary, items which can be combined shall be shown under one head, for instance ‘Issued and Subscribed Capital’. |
| Banks incorporated outside India: Capital | |||
| Other Banks (Indian) | |||
| Authorised Capital (__ shares of ₹ ___ each) | |||
| Issued Capital (__ shares of ₹ ___ each) | |||
| Subscribed Capital (__ shares of ₹ ___ each) | |||
| Called up Capital (__ shares of ₹ ___ each) | |||
| Less: Calls unpaid | |||
| Add: Forfeited shares | |||
| Paid up Capital | |||
| Notes: 1. The changes in the above items, if any, during the year, say, fresh contribution made by Government, fresh issue of capital, capitalisation of reserves, etc., shall be explained in the notes. 2. Perpetual Non-Cumulative Preference Shares (PNCPS) included as part of Tier 1 regulatory capital shall be included here. | |||
| Reserves and Surplus | 2 | (I) Statutory Reserves | Reserves created out of the profits in compliance with Section 17(1) (read with paragraph 13 of this Master Direction) or any other section of the BR Act, 1949 shall be separately disclosed. |
| (II) Capital Reserves | The expression ‘Capital Reserves’ shall not include any amount regarded as free for distribution through the Profit and Loss Account. Surplus on revaluation shall be treated as Capital Reserves. | ||
| (III) Share Premium | Premium on issue of share capital shall be shown separately under this head. | ||
| (IV) Revenue and Other Reserves | The expression ‘Revenue Reserve’ shall mean any reserve other than Capital Reserve. This item will include all reserves, other than those separately classified. The expression ‘reserve’ shall not include any amount retained by way of providing for depreciation, renewals, or diminution in value of assets or retained by way of providing for any known liability. | ||
| (V) Balance in Profit and Loss Account | Includes balance of profit after appropriations. In case of loss the balance shall be shown as a deduction. | ||
| Notes: Movements in various categories of reserves shall be shown as indicated in the schedule. | |||
| Deposits | 3 | A.I) Demand Deposits | Includes all bank deposits repayable on demand. |
| (i) From banks | |||
| (ii) From others | Includes all demand deposits of the non-bank sectors. Credit balances in overdrafts, cash credit accounts, deposits payable at call, overdue deposits, inoperative current accounts, matured time deposits, cash certificates and certificates of deposits, etc., shall be included under this category. | ||
| (II) Savings Bank Deposits | Includes all savings bank deposits (including inoperative savings bank accounts) | ||
| (III) Term Deposits | Includes all types of bank deposits repayable after a specified term. | ||
| (i) From banks | |||
| (ii) From others | Includes all types of deposits of the non-bank sector repayable after a specified term. Fixed deposits, cumulative and recurring deposits, cash certificates, certificates of deposits, annuity deposits, deposits mobilised under various schemes, ordinary staff deposits, foreign currency non-resident deposits accounts, etc., shall be included under this category. | ||
| B. i) Deposits of branches in India | The total of these two items should match the total deposits shown in the balance sheet.: 1. Interest payable on deposits which is accrued but not due shall not be included but shown under other liabilities. 2. Matured term deposits shall be treated as demand deposits. 3. Deposits under special schemes shall be included under term deposits if they are not payable on demand. When such deposits have matured for payment, they shall be shown under demand deposits. 4. Deposits from a bank will include deposits from the banking system in India, co-operative banks, foreign banks which may or may not have a presence in India. 5. A bank shall disclose by way of a footnote to this schedule, the amount of deposits against which lien is marked out of the total deposits. (For current and previous year) | ||
| ii) Deposits of branches outside India | |||
| Borrowings | 4 | (I) Borrowings in India | |
| (i) RBI | Includes repo, other borrowings or refinance obtained from RBI. | ||
| (ii) Other banks | Includes repo, other borrowings or refinance obtained from banks (including co-operative banks) and balances in Repo Account. | ||
| (iii) Other institutions and agencies | Includes borrowing / refinance obtained from Export-Import Bank of India, NABARD and other institutions, agencies (including liability against participation certificates-without risk sharing, if any) and balances in Repo Account. | ||
| (II) Borrowings outside India | Includes borrowings from outside India. | ||
| Secured borrowings included in above | This item shall be shown separately. Includes secured borrowings / refinance in India and outside India. | ||
| Notes - General: 1. The total of I and II should match the total borrowings shown in the balance sheet. 2. Inter-office transactions shall not be shown as borrowings. 3. Refinance obtained by a bank from RBI and various institutions shall be shown under the head ‘Borrowings’. Accordingly, advances shall be shown at the gross amount on the asset side. 4. The following shall be included here: a) Perpetual Debt Instruments b) Tier 2 Capital Instruments / Upper Tier 2 Capital Instruments c) Perpetual Cumulative Preference Shares (PCPS) d) Redeemable Non-Cumulative Preference Shares (RNCPS) e) Redeemable Cumulative Preference Shares (RCPS) f) Subordinated Debt. | |||
| Other Liabilities and Provisions | 5 | (I) Bills Payable | Includes drafts, telegraphic transfers, traveller’s cheques, mail transfers payable, pay slips, bankers’ cheques and other miscellaneous items. |
| (II) Inter-office adjustments (net) | The inter-office adjustments balance, if in credit, shall be shown under this head. The bank should first segregate the credit entries outstanding for more than 5 years in the inter-branch account and transfer them to a separate Blocked Account which should be shown under ‘Other Liabilities and Provisions - Others’. While arriving at the net amount of inter-branch transactions for inclusion here, or Schedule 11, as the case may be, the aggregate amount of Blocked Account should be excluded and only the amount representing the remaining credit entries should be netted against debit entries. Only net position of inter-office accounts, shall be shown here. | ||
| (III) Interest accrued | Includes interest accrued but not due on deposits and borrowings. | ||
| (IV) Others (including provisions) | Includes net provision for income tax, other taxes like interest tax (less advance payment, tax deducted at source, etc.), deferred tax (if after netting as per AS 22 is a liability), floating provisions, and contingency funds which are not disclosed as reserves but are actually in the nature of reserves, other liabilities which are not disclosed under any of the major heads such as unclaimed dividend, provisions, and funds kept for specific purposes, unexpired discount, outstanding charges like rent, conveyance, etc. Aggregate Net Credit in the Clearing Differences transferred to a separate Blocked Account shall be shown here. Outstanding credit entries in nostro accounts transferred to Blocked Account shall also be shown here. | ||
| Notes: 1. For arriving at the net balance of inter-office adjustments all connected inter-office accounts shall be aggregated and the net balance only will be shown, representing mostly items in transit and unadjusted items. 2. The interest accruing on all deposits, whether the payment is due or not, shall be treated as a liability. 3. It is proposed to show only deposits under the head ‘deposits’ and hence all surplus provisions for bad and doubtful debts, contingency funds, etc., which are not netted off against the relative assets, shall be brought under the head ‘Others (including provisions)’. 4. Provisions towards Standard Assets shall not be netted from gross advances and shown separately as ‘Provisions against Standard Assets’ under ‘Others’ in Schedule 5 of the Balance Sheet. 5. Where any item under the ‘Others (including provisions)’ exceeds one per cent of the total assets, particulars of all such items shall be disclosed in the notes to accounts. | |||
| ASSETS | |||
| Cash and balances with the RBI | 6 | (I) Cash in hand (including foreign currency notes) | Includes cash in hand including foreign currency notes. |
| (II) Balances with RBI | |||
| (i) in Current Account | |||
| (ii) in Other Accounts | All type of reverse repos with the RBI including those under Liquidity Adjustment Facility shall be presented under sub-item (ii) ‘in Other Accounts’. | ||
| Balances with banks and money at call and short notice | 7 | (I) (i) (a) In India (b) Balances with banks in Current Accounts in Other Deposit Accounts | Includes all balances with banks in India (including Co-operative banks), except Money at Call and Short Notice as explained below. Balances in current account and other deposit accounts shall be shown separately. |
| (ii) (a) Money at Call and Short notice (b) with banks with other institutions | Includes the following if they are for original tenors up to and inclusive of 14 days: (i) Money lent in the call / notice money market (ii) Reverse Repo with banks and other institutions The balances in Reverse Repo A/C shall be classified under Schedule 7 under item I (ii) a or I (ii) b as appropriate. | ||
| (II) (i) Outside India (ii) in Current Accounts (iii) in Other Deposit Accounts (iv) Money at Call and Short Notice | Includes balances held outside India by the bank. The amounts held in ‘current accounts’ and ‘deposit accounts’ shall be shown separately. ‘Money at Call and Short Notice’ outside India includes deposits usually classified as per that foreign jurisdiction’s laws, regulations, or market practices as money at call and short notice where such money is lent. | ||
| Investments | 8 | (I) Investments in India in | |
| (i) Government securities | Includes Central and State Government Securities, and Government Treasury Bills. | ||
| (ii) Other Approved Securities | Securities other than Government Securities, which have been specified by the RBI as ‘approved securities’ under Section 5(a) of the BR Act, 1949, shall be included here. | ||
| (iii) Shares | Investments in shares of companies and corporations not included in item (ii) shall be included here. | ||
| (iv) Debentures and Bonds | Investments in debentures (as defined by the Companies Act, 2013) and bonds of companies and corporations not included in item (ii) shall be included here. | ||
| (v) Subsidiaries and / or Joint Ventures | Investments in subsidiaries and joint ventures (including associates) shall be included here | ||
| (vi) Others | Residual investments, if any, like mutual funds, gold, etc. | ||
| (II) Investments outside India | |||
| (i) Government Securities (including local authorities) | All foreign Government Securities including securities issued by local authorities shall be classified under this head. | ||
| (ii) Subsidiaries and / or Joint ventures abroad | All investments made in the share capital of subsidiaries floated outside India and / or joint ventures abroad shall be classified under this head. | ||
| (iii) Other investments | All other investments outside India shall be shown under this head. | ||
| Advances | 9 | A.(i) Bills purchased and discounted (ii) Cash credits, overdrafts and loans repayable on demand (iii) Term loans | In classification under Section A, all outstanding advances net of provisions made, will be classified under three heads as indicated and shall include both secured and unsecured advances as well as overdue instalments. Receivables acquired under factoring shall be reported under ‘Bills purchased and Discounted’. All loans repayable on demand and short-term loans with original maturity up to one year shall be classified under ‘Cash credits, overdrafts and loans repayable on demand’. Outstanding balances on credit cards shall be included under this category. Other balances pertaining to credit operations, even if they are dues from other banks / organisations shall be shown as part of advances. However, where such dues are in the nature of fee or other revenue receivable the same may be shown as Other Assets. A ‘Term Loan’ is a loan which has a specified maturity and is payable in instalments or in bullet form. All ‘Term Loans’ with maturity in excess of one year shall be classified under this category (i.e., A(iii)) whereas as explained above short term loans with original maturity up to one year shall be categorised as loans repayable on demand. |
| B.(i) Secured by tangible assets | All advances or part of advances including advances against book debts which are secured by tangible assets shall be shown here. The bank shall specify that advances secured by tangible assets includes advances against book debts. | ||
| (ii) Covered by Bank / Government Guarantee | Advances to the extent they are covered by guarantees of Indian / foreign governments, Indian / foreign banks, Deposit Insurance and Credit Guarantee Corporation (DICGC), and Export Credit Guarantee Corporation of India (ECGC) shall be included here. Further, advances to the extent they are covered by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH), and individual schemes under National Credit Guarantee Trustee Company Ltd. (NCGTC) which are backed by explicit Central Government Guarantee*, shall also be included here. *Note: In terms of the Reserve Bank of India (Local Area Banks – Prudential Norms on Capital Adequacy) Directions, 2025. | ||
| (iii) Unsecured | All advances not classified under (i) and (ii) shall be included here. Rights, licenses, authorisations, etc., charged to a bank as collateral should not be reckoned as tangible security and therefore such advances shall be reckoned as unsecured under this head, with a disclosure of the same in the notes to the account. Total of ‘A’ should tally with total of ‘B’. | ||
| C. (I) (i) Advances in India (ii) Priority Sector (iii) Public Sector (iv) Banks (v) Others (II) Advances outside India (i) Due from banks (ii) Due from others (iii) Bills purchased and discounted (iv) Syndicated loans (v) Others | Advances shall be classified on the sectoral basis as indicated. Advances, which qualify as priority sector lending according to extant RBI instructions are to be classified under the head ‘Priority Sector’. Such advances shall be excluded from item (ii), i.e., advances to public sector. Advances to Central / State Governments and other Government undertakings including Government Companies and statutory corporations shall be included in the category ‘Public Sector’. All advances to the banking sector including Co-operative Banks shall come under the head ‘Banks’. All the remaining advances will be included under the head ‘Others’ and typically this category will include non-priority sector advances to the private, joint, and co-operative sectors. | ||
| Notes: 1. Advances shall be reported net of provisions made thereon (other than provisions towards Standard Assets). To the extent that Floating provisions have not been treated as Tier 2 capital, they shall also be netted off from advances. 2. Term loans reported shall not include loans repayable on demand. 3. Consortium advances shall be reported net of share of other participating banks / institutions. 4. All interest-bearing loans and advances granted to bank’s own staff shall be included here. 5. Advances to other banks / organisations shall be included here. 6. Interest accrued but not due should not be reflected here. Instead, it shall be shown under ‘Interest accrued’ in other assets. 7. Rights, licenses, authorisations, etc., charged to the bank as security / collateral in respect of projects (including infrastructure projects) financed by them, shall not be reckoned as tangible security. Such advances shall be reckoned as unsecured. 8. Partial credit enhancement facilities to the extent drawn shall be treated as an advance. 9. The aggregate amount of inter - bank participations with risk sharing would be reduced from the aggregate advances outstanding by issuing bank. Participating bank shall show the amount of inter-bank participations under advances. Where the participation is without risk sharing, it shall be reflected by the participating bank as due from Banks under Schedule 9. 10. Reverse Repo with banks and other institutions having original tenors more than 14 days shall be shown under this Schedule under following head: i. A.(ii) ‘Cash credits, overdrafts and loans repayable on demand’ ii. B.(i) ‘Secured by tangible assets’ iii. C.(I).(iii) Banks (iv) ‘Others’ (as the case may be) | |||
| Fixed Assets | 10 | (I) (i) Premises (ii) At cost as on March 31 of the preceding year (iii) Additions during the year (iv) Deductions during the year (v) Depreciation to date | Premises, including land, wholly or partly owned by the bank for the purpose of business including residential premises shall be shown against ‘Premises’. In the case of premises and other fixed assets, the previous balance, additions thereto and deductions therefrom during the year as also the total depreciation written off shall be shown. |
| (II) (i) Other Fixed Assets (including furniture and fixtures) (ii) At cost as on March 31 of the preceding year (iii) Additions during the year (iv) Deductions during the year (v) Depreciation to date | Furniture and fixtures, vehicles, and all other fixed assets shall be shown under this head. | ||
| Other Assets | 11 | (I) Inter-office adjustments (net) | The inter-office adjustments balance, if in debit, shall be shown under this head. Only net position of inter-office accounts shall be shown here. For arriving at the net balance of inter-office adjustment accounts, all connected inter-office accounts shall be aggregated and the net balance, if in debit only shall be shown representing mostly items in transit and unadjusted items. |
| (II) Interest accrued | Interest accrued but not due on investments and advances and interest due but not collected on investments will be the main components of this item. As a bank normally debit the borrowers’ account with interest due on the balance sheet date, usually there may not be any amount of interest due on advances. Only such interest as can be realised in the ordinary course shall be shown under this head. | ||
| (III) Tax paid in advance / tax deducted at source | The amount of advance tax paid, tax deducted at source (TDS), etc., to the extent that these items are not set off against relative tax provisions shall be shown against this item. | ||
| (IV) Stationery and stamps | Only exceptional items of expenditure on stationery like bulk purchase of security paper, loose leaf, or other ledgers, etc., which are shown as quasi-asset to be written off over a period of time shall be shown here. The value shall be on a realistic basis and cost escalation shall not be taken into account, as these items are for internal use. | ||
| (V) Non-banking assets acquired in satisfaction of claims | Immovable properties / tangible assets acquired in satisfaction of claims are to be shown under this head. | ||
| (VI) Others | This will include items like claims which have not been met, for instance, clearing items, debit items representing addition to assets or reduction in liabilities which have not been adjusted for technical reasons, want of particulars, etc. Accrued income other than interest shall also be included here. All non-interest-bearing loans and advances granted to the bank’s staff shall be reported here. Cash Margin Deposit with The Clearing Corporation India Limited (CCIL) shall be shown here. Deposits placed with NABARD / SIDBI / NHB, etc., on account of shortfall in priority sector targets shall be included here. A bank shall also disclose the details of such deposits, both for the current year and previous year, as a footnote in Schedule 11 of the Balance Sheet. Where any item under ‘Others’ exceeds one per cent of the total assets, particulars of all such items shall be disclosed in the notes to accounts. | ||
| Contingent Liabilities | 12 | (I) Claims against the bank not acknowledged as debts | -- |
| (II) Liability for partly paid investments | Liability on partly paid shares, debentures, etc., will be included in this head. | ||
| (III) Liability on account of outstanding forward exchange contracts | Outstanding forward exchange contracts shall be included here. | ||
| (IV) (i) Guarantees given on behalf of constituents (ii) In India (iii) Outside India | Guarantees given for constituents shall be shown. | ||
| (V) Acceptances, endorsements and other obligations | This item will include letters of credit and bills accepted by the bank on behalf of its customers. | ||
| (VI) Other items for which the bank is contingently liable | Arrears of cumulative dividends, bills rediscounted, commitments of underwriting contracts, estimated amount of contracts remaining to be executed on capital account and not provided for etc., are to be included here. All unclaimed liabilities (where amount due has been transferred to the Depositors Education and Awareness Fund established under the Depositor Education and Awareness Fund Scheme, 2014) shall be shown here. The undrawn partial credit enhancement facilities shall be shown here. When Issued (‘WI’) securities should be recorded in books as an off-balance sheet item till issue of the security. The off-balance sheet net position in the ‘WI’ market should be marked to market scrip-wise on daily basis at the day’s closing price of the ‘WI’ security. In case the price of the ‘WI’ security is not available, the value of the underlying security determined as per extant regulations may be used instead. Depreciation, if any, should be provided for and appreciation, if any, should be ignored. On delivery, the underlying security may be classified in any of the three categories, viz., ‘Held to Maturity’, ‘Available for Sale’, or ‘FVTPL’, depending upon the nature contractual cash flow and the intent of holding, at the contracted price. | ||
| Bills for collection | -- -- Bills and other items in the course of collection and not adjusted will be shown against this item in the summary version only. No separate Schedule is proposed. |
