What changed
The RBI has amended the Financial Statements Directions to add a new note in Schedule 1 (Capital) for nationalised banks and foreign banks. Banks must now disclose the amount held under Section 11(2)(b)(i) of the BR Act that is designated as Credit Risk Mitigation (CRM) for offsetting non-centrally cleared derivative exposures to their Head Office. This disclosure must state that such amount is not reckoned for regulatory capital or other statutory requirements.
What it means for you
Banks will need to update their balance sheet schedules to include this specific CRM disclosure, which increases transparency around capital treatment of certain deposits. For lenders, this means additional compliance work in financial reporting, but it also clarifies that CRM-designated deposits are not part of regulatory capital. The change is tied to the implementation timeline of the Concentration Risk Management amendments, so banks must coordinate both sets of changes.
What you must do
- Update Schedule 1 of financial statements to include the prescribed note on CRM-designated deposits under Section 11(2).
- Coordinate implementation with the parallel Concentration Risk Management Amendment Directions, effective from the earlier of your adoption date or April 1, 2026.
- Ensure that the CRM amount disclosed is excluded from regulatory capital and other statutory calculations.
- Train reporting teams on the new disclosure requirement and its linkage to derivative exposure offsetting.
Who it affects
Nationalised banks, Foreign banks operating in India, Bank finance and reporting teams, Compliance departments
When does this amendment take effect?
It takes effect from the date a bank decides to implement paragraphs 3(1) to 3(4) of the Concentration Risk Management Amendment Directions, 2025, or from April 1, 2026, whichever is earlier.
What exactly must be disclosed in Schedule 1?
Banks must disclose the amount held under Section 11(2)(b)(i) of the BR Act that is earmarked as Credit Risk Mitigation for non-centrally cleared derivative exposures to Head Office, along with a note that this amount is not counted for regulatory capital or other statutory requirements.
Does this apply to all commercial banks?
The amendment specifically modifies the table under Paragraph 5(1) for nationalised banks and banks incorporated outside India. Other bank types may not be directly affected unless covered by the broader Directions.