RBI Clarifies Financial Statement Disclosures for Banks

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 banks were required to do at the time

• 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)