RBI Moves SFB LCR and NSFR Disclosure Rules to 2025 Directions, Effective April 2027
Priya, the ALM head at a small finance bank, updates her team's reporting checklist. She crosses out the old LCR template reference and pencils in a new one — from the 2025 Financial Statements Directions. Her deadline: April 1, 2027.
- RBI issued the Reserve Bank of India (Small Finance Banks – Asset Liability Management) Amendment Directions, 2026 on July 30, 2026, under circular reference RBI/DOR/2026-27/211.
- Paragraph 197 (LCR disclosure) and Paragraph 243 (NSFR disclosure) in the 2025 ALM Directions are replaced with references to the 2025 Financial Statements and Capital Adequacy Directions.
- The amendment is consequent to the Capital Adequacy Fifth Amendment Directions, 2026, which pertains to Basel Pillar 3 disclosures.
- The changes take effect from April 1, 2027.
- The amendment is issued under Section 35A of the Banking Regulation Act, 1949.
- RBI replaced LCR (Paragraph 197) and NSFR (Paragraph 243) disclosure references in SFB ALM Directions with cross-references to 2025 Financial Statements and Capital Adequacy Directions.
- The change is driven by the Capital Adequacy Fifth Amendment Directions, 2026, which updated Basel Pillar 3 disclosures.
- Effective date: April 1, 2027 — SFBs have until then to update manuals, train staff, and adjust systems.
- The amendment does not change LCR or NSFR calculation methods — only where banks find the disclosure templates.
- This is a move toward a single, consistent source for all Basel Pillar 3 disclosure requirements.
What Exactly Changed?
Before this amendment, Small Finance Banks (SFBs) looked at Paragraphs 197 and 243 of the Reserve Bank of India (Small Finance Banks – Asset Liability Management) Directions, 2025 for their Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) disclosure templates and instructions.
Now, those two paragraphs are replaced. SFBs must instead refer to two other sets of directions:
- Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Directions, 2025
- Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Directions, 2025
Think of it like this: RBI moved the LCR and NSFR disclosure rulebook from one shelf to another. The rules themselves haven't changed — just where you find them.
Why Did RBI Make This Change?
The amendment is a direct result of the Capital Adequacy Fifth Amendment Directions, 2026, which updated the Basel Pillar 3 disclosure requirements for SFBs. Basel Pillar 3 is the part of international banking rules that forces banks to be transparent about their risks and capital.
RBI wanted all disclosure templates — for capital, LCR, and NSFR — to live in the same place: the Financial Statements and Capital Adequacy Directions. This makes it easier for banks to find and follow the correct formats.
What Are LCR and NSFR? A Quick Refresher
LCR (Liquidity Coverage Ratio): This measures whether a bank has enough high-quality liquid assets (like government bonds) to survive a 30-day stress scenario. Think of it as a bank's emergency cash reserve.
NSFR (Net Stable Funding Ratio): This looks at a bank's funding over a one-year horizon. It ensures that long-term assets are funded with stable sources of money, not short-term borrowings that could vanish.
Both ratios are part of Basel III, the global banking rules created after the 2008 financial crisis.
Who Is Affected?
This circular directly impacts:
- Small Finance Banks (SFBs) — all 12 of them, including AU SFB, Equitas SFB, Ujjivan SFB, etc.
- ALM (Asset Liability Management) teams at these banks
- Compliance and reporting departments that prepare regulatory disclosures
- IT/Systems teams that maintain reporting templates and software
If you work in any of these roles, you need to update your internal manuals and train your staff before April 1, 2027.
What You Must Do Before April 1, 2027
RBI has given SFBs about eight months to prepare. Here's your action checklist:
- Review the 2025 Financial Statements and Capital Adequacy Directions for the new LCR and NSFR disclosure templates.
- Update your internal ALM reporting manuals to point to the new sources.
- Train your ALM and compliance staff on the revised cross-referencing requirements.
- Prepare your systems — reporting software, dashboards, and audit trails — to adopt the changes from April 1, 2027.
🔭 The Unseen Angle: Why This Matters for Basel Pillar 3 Compliance
Most coverage will focus on the mechanics — 'paragraph 197 replaced, paragraph 243 replaced.' But the real story is about consistency in regulatory reporting.
By moving LCR and NSFR disclosure references into the Financial Statements and Capital Adequacy Directions, RBI is creating a single source of truth for all Basel Pillar 3 disclosures. This reduces the risk of banks using outdated or conflicting templates.
For SFBs, this is a signal: RBI is tightening the screws on disclosure quality. If you're an SFB compliance officer, don't just update your manual — audit your current LCR and NSFR reports against the new templates. The old ones might have subtle differences that could trip you up in an RBI inspection.
This is also a reminder that Basel III implementation is an ongoing process, not a one-time event.
Questions people ask
RBI made the change because it issued the Capital Adequacy Fifth Amendment Directions, 2026, which updated Basel Pillar 3 disclosure requirements. To keep everything consistent, RBI moved the LCR and NSFR disclosure templates into the same set of directions — the 2025 Financial Statements and Capital Adequacy Directions.
From April 1, 2027.
The source does not address calculation methods; only disclosure template references change.