RBI master-direction RBI/DoR/2025-26/289 · 28 Nov 2025
Official title
Reserve Bank of India (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 (Updated as on April 1, 2026)
Summary
Check the official recordThe Reserve Bank of India issues these Directions to standardize the presentation and disclosure of financial statements for Urban Co-operative Banks. Banks must prepare their Balance Sheet and Profit and Loss Account in the formats prescribed under the Banking Regulation Act, 1949. The Directions mandate specific disclosures in the Notes to Accounts, including regulatory capital, asset quality, investment portfolios, and related party transactions. Banks must also follow specific accounting treatments for inter-branch accounts, Nostro accounts, and fraud provisioning. These Directions replace previous instructions on this subject. Banks must ensure their financial statements reflect a true and fair view, as the Reserve Bank of India will penalize instances of window dressing or misclassification of assets.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DoR/2025-26/289 DoR.ACC.REC.No.208/21.04.018/2025-26 November 28, 2025
Previous Versions
Reserve Bank of India (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 (Updated as on April 1, 2026)
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.
These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks - Financial Statements: Presentation and Disclosures) Directions, 2025.
These Directions shall come into effect on the day these are placed on the official website of the Reserve Bank of India.
In this context, urban co-operative banks shall mean Primary Co-operative Banks as defined under section 5(ccv) read with Section 56 of Banking Regulation Act, 1949.
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.
(1) Accounting Standard 5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
(i) 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.
(ii) 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.
(iii) 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 all a bank should 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 percent of the total income / total expenditure of the bank if the income / expenditure is reckoned on a gross basis or one percent of the net profit before taxes or net losses as the case may be if the income is reckoned net of costs.
(iv) 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
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 a bank shall be guided by the following while complying with the provisions of the standard.
(i) Exchange rate for recording foreign currency transactions
(a) 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.
(b) 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:
(i) 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:
