The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 that sets out a comprehensive framework governing the preparation, presentation, and disclosure of financial statements by Small Finance Banks (SFBs). Issued under Section 35A of the Banking Regulation Act, 1949, the aims to align SFB financial reporting with statutory accounting standards and enhance transparency, comparability, and supervisory consistency. It prescribes uniform formats for balance sheets and profit and loss accounts in accordance with the Third Schedule to the Act and integrates relevant provisions of the Companies (Accounting Standards) Rules, 2021.
The Directions provide detailed compilation instructions for each balance sheet and profit and loss item — including capital structure, reserves, deposits, borrowings, advances, investments, fixed assets, other liabilities, and contingent liabilities — ensuring standardized accounting treatment and disclosure across all SFBs. It emphasizes correct classification of assets and liabilities, accurate reporting of inter-branch adjustments, provisioning norms, treatment of interest accrued, and valuation of investments. Separate schedules and detailed notes guide reporting for income, expenditure, depreciation, and contingent exposures, with explicit references to prudential and disclosure requirements under relevant RBI Directions.
Further, the introduces enhanced disclosure and control requirements covering reconciliation of Nostro accounts, provisioning for fraud, deferred tax liabilities on special reserves, and measures against window dressing. It mandates consistency in presentation and notes to accounts, requiring SFBs to provide granular disclosures of material items exceeding 1% of total assets or income. On coming into force, these Directions will supersede earlier instructions and ensure that financial statements of SFBs reflect a true and fair view of operations while adhering to uniform, prudential, and transparent accounting and disclosure standards.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/198 DOR.ACC.REC.No.117/21.04.018/2025-26]
