What changed
RBI clarified that lien-marked deposits should stay classified under Schedule 3 (Deposits) with suitable disclosures, not under 'Other Liabilities'. Advances backed by CGTMSE, CRGFTLIH, or NCGTC with explicit Central Government guarantee must be disclosed under 'Advances Covered by Bank/Government Guarantee' (Schedule 9 B ii). Repo and reverse repo transaction disclosures now require both market value and face value reporting.
What it means for you
Banks must adjust their balance sheet classification for lien-marked deposits to avoid misreporting under 'Other Liabilities'. The inclusion of CGTMSE/CRGFTLIH/NCGTC advances as government-guaranteed improves their risk-weight treatment and capital adequacy. Dual-value reporting for repo/reverse repo enhances transparency and aligns with market practices, impacting liquidity and risk disclosures.
What you must do
- Reclassify lien-marked deposits from 'Other Liabilities' to Schedule 3 (Deposits) with appropriate disclosures for FY2024-25 financial statements.
- Disclose advances covered by CGTMSE, CRGFTLIH, and NCGTC (with explicit Central Government guarantee) under Schedule 9 B (ii) as government-guaranteed.
- Update repo and reverse repo disclosure templates to include both market value and face value in notes to accounts.
- Train finance and compliance teams on these clarifications to ensure accurate reporting from March 31, 2025 onwards.
Who it affects
All commercial and cooperative banks in India, Bank finance and accounting departments, Compliance and risk management teams, Indian Banks' Association (IBA)
How should we classify margin money deposits with a lien in the balance sheet?
RBI clarifies that lien-marked deposits should remain under Schedule 3: Deposits, not under 'Other Liabilities'. Ensure suitable disclosures are made in the notes to accounts.
Are CGTMSE-guaranteed advances considered secured or unsecured for disclosure?
Advances covered by CGTMSE, CRGFTLIH, or NCGTC with explicit Central Government guarantee must be disclosed under 'Advances Covered by Bank/Government Guarantee' (Schedule 9 B ii), not as unsecured advances.
Do we need to report repo/reverse repo at market value or face value?
Both. RBI now requires disclosures in market value terms as well as face value terms for repo and reverse repo transactions in the notes to accounts.