Reserve Bank of India (Small Finance Banks – Asset Liability Management) Directions, 2025

RBI/DOR/2025-26/194
DOR.LRG.No.113/13-10-002/2025-26
November 28, 2025

Reserve Bank of India (Small Finance Banks – Asset Liability Management) Directions, 2025

Table of Contents

Chapter I – Preliminary
A. Short Title and Commencement
B. Applicability
C. Definitions

Chapter II – Role of the Board
A. Responsibilities of the Board
B. Approval of Policies, limits and reviews

Chapter III – Liquidity Risk Management
A. Introduction
B. Governance of Liquidity Risk Management
C. Liquidity Risk Management Policy
D. Strategy for Managing Liquidity Risk
E. Identification
F. Risk Measurement – Flow Approach
G. Risk Measurement – Stock Approach
H. Risk Monitoring
I. Liquidity Across Currencies
J. Liquidity Risk Tolerance
K. Management Information System (MIS)
L. Internal Controls
M. Monitoring of Liquidity
N. Off-balance Sheet Exposures and Contingent Liabilities
O. Collateral Position Management
P. Incorporation of Liquidity Costs, Benefits and Risks in the Internal Pricing
Q. Funding Strategy - Diversified Funding
R. Liquidity risk due to Intra Group transfers
S. Stress Testing
T. Contingency Funding Plan (CFP)

Chapter IV – Intraday Liquidity Management
A. Introduction
B. Intraday liquidity sources and usage
C. Intraday liquidity monitoring tools
D. Intraday liquidity stress scenarios
E. Monitoring tools applicable to all reporting banks (Category A)
F. Monitoring tools applicable to a reporting bank that provides correspondent banking services
G. Monitoring tool applicable only to reporting banks which are direct participants.
H. Scope of Intraday Liquidity Risk Monitoring

Chapter V – Liquidity Coverage Ratio (LCR)
A. Objective
B. Definition of LCR
C. Scope
D. Principles for calculating the LCR on a consolidated basis
E. High Quality Liquid Assets
E.1 Fundamental characteristics
E.2 Market-related characteristics
E.3 Operational Requirements
F. Categories of HQLA
F.1 Level 1 Assets
F.2 Level 2 Assets
G. Treatment of a Pool of Collateral towards Stock of HQLA
H. Calculation of LCR
I. Calculation of Total net cash outflows
J. Cash Outflows
K. Cash Inflows
L. Liquidity Risk Monitoring Tools
L.1 Contractual Maturity Mismatch
L.2 Concentration of Funding
L.3 Available Unencumbered Assets
L.4 LCR by Significant Currency
L.5 Market-related Monitoring Tools
M. LCR Disclosure Standards

Chapter VI – Net Stable Funding Ratio (NSFR)
A. Objective
B. Scope
C. Definition of NSFR
D. Calibrations of ASF and RSF - Criteria and Assumptions
E. Definition and computation of Available Stable Funding
E.1 Liabilities and Capital receiving a 100 per cent ASF Factor
E.2 Liabilities receiving a 95 per cent ASF factor
E.3 Liabilities receiving a 90 per cent ASF factor
E.4 Liabilities receiving a 50 per cent ASF factor
E.5 Liabilities receiving a zero per cent ASF factor
F. Calculation of derivative liability amounts
G. Computation of Required Stable Funding (RSF)
G.1 Assets assigned a zero per cent RSF factor
G.2 Assets assigned a 5 per cent RSF factor
G.3 Assets assigned a 10 per cent RSF factor
G.4 Assets assigned a 15 per cent RSF factor
G.5 Assets assigned a 50 per cent RSF factor
G.6 Assets assigned a 65 per cent RSF factor
G.7 Assets assigned an 85 per cent RSF factor
G.8 Assets assigned a 100 per cent RSF factor
G.9 RSF factors for Off-balance sheet (OBS) items
G.10 RSF Factors Assignment – General Principles
H. Encumbered Assets
I. Secured Financing Transactions
J. Calculation of Derivative Asset Amounts
K. NSFR Disclosure Standards

Chapter VII – Interest Rate Risk (IRR) Management
A. General Instructions
B. Earnings Perspective – TGA
C. Economic Value Perspective – DGA
D. Monitoring of Interest Rate Risk
E. Treatment of positions in various currencies
F. Interest rate risk management

Chapter VIII – Monitoring and Reporting
A. Liquidity Risk
A.1 Preparation and Review of Statements
A.2 Regulatory Reporting and Periodicity of Returns
B. Interest Rate Risk
B.1 Preparation and Review of Statements
B.2 Regulatory Reporting and Periodicity of Returns

Chapter IX – Repeal and Other Provisions
A. Repeal and Saving
B. Application of other laws not barred
C. Interpretations

Annex-I: Liquidity Return
Annex-II: Basel III Liquidity Returns
Annex-III: Interest Rate Sensitivity Statement
Annex-IV: Basel Principles for Liquidity Risk Management
Annex-V: Guidance for Slotting Cash Flows Part A1 and B
Annex-VI: Guidance for Slotting Cash Flows Part A2
Annex-VII: Guidance on Bucketing

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.

Chapter I – Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Small Finance Banks – Asset Liability Management) Directions, 2025.

2. These Directions shall come into effect from the date of issue.

B. Applicability

3. These Directions shall be applicable to Small Finance Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank').

Note: Mere mention of an activity, transaction or item in these 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, transaction, or item.

C. Definitions

4. In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them below:

• (1) ‘Business Day’ means the opening hours of the Large Value Payment System (LVPS) or of correspondent banking services during which a bank can receive and make payments in a local jurisdiction. Explanation: An LVPS is a funds transfer system that typically handles large-value and high-priority payments. In India, Real Time Gross Settlement System (RTGS) is an LVPS.
• (2) ‘Cash in hand’ shall consist of total amount of notes and coins held by bank branches / ATMs / Cash deposit machines maintained by a bank, including transit cash on bank’s books as also cash with Business Correspondents (BCs), but shall exclude cash, where physical possession is with outsourced vendors / BCs, which is not replenished in bank’s ATM and / or is not reflected on bank’s books.
• (3) ‘Cash Reserve Ratio (CRR)’ shall have the same meaning as a bank defined in the Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025.
• (4) ‘Government security’ shall have the same meaning as assigned to it in Section 2(f) of the Government Securities Act, 2006.
• (5) ‘Interest Rate Risk (IRR)’ means the risk where changes in market interest rates might adversely affect a bank's financial condition.
• (6) ‘Intraday Liquidity’ means funds which can be accessed during the business day, usually to enable a bank to make payments in real time.
• (7) ‘Intraday Liquidity Risk’ means the risk that a bank fails to manage its intraday liquidity effectively, which could leave it unable to meet a payment obligation at the time expected, thereby affecting its own liquidity position and that of other parties.
• (8) ‘Funding Liquidity Risk’ means the risk that a bank will not be able to meet efficiently the expected and unexpected current and future cash flows and collateral needs without affecting either its daily operations or its financial condition.
• (9) ‘Marginal Standing Facility (MSF)’ shall mean the facility as mentioned in RBI press release dated September 30, 2025.
• (10) ‘Market Liquidity Risk’ means the risk that a bank cannot easily offset or eliminate a position at the prevailing market price because of inadequate market depth or due to market disruption.
• (11) ‘Modified Duration’ means the approximate percentage change in value of an asset or liability for a 100-basis point change in the rate of interest.
• (12) ‘Net Worth’ comprises of Paid-up capital plus Free Reserves including Share Premium but excluding Revaluation Reserves, plus Investment Fluctuation Reserve and credit balance in Profit & Loss Account, less debit balance in Profit and Loss account, Accumulated Losses and Intangible Assets. No general or specific provisions should be included in computation of Net Worth.
• (13) ‘Statutory Liquidity Ratio (SLR)’ shall have the same meaning as defined in Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025.
• (14) ‘Time-specific obligations’ means the obligations which must be settled at a specific time within the day or have an expected intraday settlement deadline.
• (15) ‘Unencumbered’ means free of legal, regulatory, contractual, or other restrictions on the ability of the bank to liquidate, sell, transfer, or assign an asset.

5. All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Banking Regulation Act, the RBI Act, rules / regulations made thereunder, or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be.