RBI Deletes LCR, NSFR, and Remuneration Disclosures from SFB Financial Statements, Effective April 1, 2027

Ravi, the CFO of a small finance bank, is preparing the annual report for FY2027-28. He removes the LCR and NSFR tables from the financial statement notes, as per the new direction, and instead ensures his team submits these numbers through the separate Basel Pillar 3 return to RBI.

What Exactly Changed?

On July 30, 2026, the Reserve Bank of India issued the Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Fourth Amendment Directions, 2026. This circular deletes three specific disclosure requirements from the earlier 2025 Directions:

• Liquidity Coverage Ratio (LCR) – a measure of a bank's ability to survive a 30-day stress scenario using high-quality liquid assets.
• Net Stable Funding Ratio (NSFR) – a measure of a bank's long-term funding stability over one year.
• Remuneration disclosures – details on how the bank pays its top executives, including variable pay and bonuses.

These disclosures were previously required in the financial statements (notes to accounts) of SFBs. From April 1, 2027, they will no longer appear there.

Why Did RBI Make This Change?

The reason is straightforward: duplication removal. RBI has issued separate, comprehensive Basel Pillar 3 disclosure directions specifically for Small Finance Banks. These directions already require SFBs to report LCR, NSFR, and remuneration details to the regulator. Having the same information in both the financial statements and the Pillar 3 returns was redundant.

Think of it like this: if you already submit your monthly expense report to your manager, you don't need to paste the same numbers into a separate email to the same person. RBI is simply cleaning up its own rulebook.

This is part of a broader trend at RBI to streamline reporting. For example, the SLR Rate Cut to 18% in July 2026 similarly simplified liquidity requirements for all banks.

What Does This Mean for SFBs?

For Small Finance Banks, this is a reduction in reporting burden. Their annual financial statements will be shorter and simpler. However, it does not mean they stop reporting these numbers to RBI. The LCR, NSFR, and remuneration data will still be submitted through the separate Basel Pillar 3 returns.

For compliance officers, the key action is to update internal reporting templates and audit checklists. For auditors, the change means they will no longer verify these disclosures in the financial statements, but they may still need to review them in the Pillar 3 returns.

For investors and analysts, the information is still available – just in a different document. They will need to look at the Pillar 3 disclosures instead of the financial statement notes.

What Must SFBs Do by April 1, 2027?

The effective date is April 1, 2027, giving banks about eight months to prepare. Here is the action checklist:

• Remove LCR and NSFR disclosure templates from financial statement schedules.
• Delete remuneration disclosure requirements from financial statement notes.
• Coordinate with compliance teams to align internal reporting with the new Basel Pillar 3 disclosure regime.
• Update board-approved policies and audit checklists to reflect these deletions.

This is a straightforward administrative change, but missing the deadline could lead to non-compliance with the 2025 Directions. Banks should start updating their reporting systems now.

Who Is Affected?

This circular directly impacts:

• Small Finance Banks (SFBs) – all 12 SFBs operating in India.
• Compliance officers at SFBs – responsible for updating reporting templates.
• Auditors reviewing SFB financial statements – will no longer verify these disclosures.
• Regulatory reporting teams – must ensure Pillar 3 returns are accurate and timely.

It does not affect commercial banks, cooperative banks, or non-banking financial companies (NBFCs). Those entities have their own disclosure rules.

How Does This Fit Into the Bigger Picture?

RBI has been steadily refining its regulatory framework for Small Finance Banks. In recent years, it has issued separate directions on capital adequacy, governance, and now disclosures. This amendment is a logical step: once a separate Pillar 3 regime exists, the financial statement disclosures become redundant.

For bankers preparing for exams like IBPS Clerk 2026 or RBI Grade B 2026, understanding this change is important. Questions on regulatory disclosures, Basel norms, and SFB-specific rules are common in these exams.

For a broader understanding of how RBI regulates banks, see our Banking Awareness Guide 2026, which covers KYC, BBPS, CRILC, and other key topics.

Questions people ask