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RBI Amends Bank Financial Disclosure Rules for CRM

Current · Source: Reserve Bank of India · RBI/2025-26/167 · issued 01 Jan 2026 · ~2 min read
Quick answerRBI now requires banks to disclose in Schedule 1 any portion of Section 11(2) deposits earmarked as Credit Risk Mitigation for non-centrally cleared derivative exposures to Head Office. This aligns with new Concentration Risk Management directions.
The rule, in the simplest words
How it plays out — a real example

A credit & lending officer in Indore is preparing the bank's annual financial report. She sees that her bank has set aside some deposits under Section 11(2) to cover risks from derivative trades with the Head Office. She now adds a new line in Schedule 1, clearly stating that this amount is not part of the bank's regulatory capital, making the report more transparent for regulators.

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

Who it affects

Nationalised banks, Foreign banks operating in India, Bank finance and reporting teams, Compliance departments

❓ Common questions

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.

📜 Read the original circular — full text as issued by RBI
RBI/2025-26/167 DOR.CRE.REC.371/21.04.018/2025-26 January 1, 2026 Reserve Bank of India (Commercial Banks - Financial Statements: Presentation and Disclosures) Amendment Directions, 2026 Please refer to the Reserve Bank of India (Commercial Banks - Financial Statements: Presentation and Disclosures) Directions, 2025 (hereinafter referred to as ‘the Directions ’). 2. On a review consequent to the issuance of Reserve Bank of India (Commercial Banks – Concentration Risk Management) Amendment Directions, 2025 , and in exercise of the powers conferred by the sections 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified. 3. The Amendment Directions modifies the table under Paragraph 5(1) of the Directions as under: Item
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/167 · issued 01 Jan 2026. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Ensure that the CRM amount disclosed is excluded from regulatory capital and other statutory calculations.
📜 Compliance
  • 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.
  • Train reporting teams on the new disclosure requirement and its linkage to derivative exposure offsetting.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Nationalised banks, Foreign banks operating in India, Bank finance and reporting teams, Compliance departments), your first concrete step on “RBI Amends Bank Financial Disclosure Rules for CRM” is: “Update Schedule 1 of financial statements to include the prescribed note on CRM-designated deposits under Section 11(2).” (RBI issued this 01 Jan 2026).

  1. Circular: RBI/2025-26/167 -- RBI Amends Bank Financial Disclosure Rules for CRM
  2. Issued: 01 Jan 2026
  3. Action required: Update Schedule 1 of financial statements to include the prescribed note on CRM-designated deposits under Section 11(2).
  4. Action required: Coordinate implementation with the parallel Concentration Risk Management Amendment Directions, effective from the earlier of your adoption date or April 1, 2026.
  5. Action required: Ensure that the CRM amount disclosed is excluded from regulatory capital and other statutory calculations.
  6. Action required: Train reporting teams on the new disclosure requirement and its linkage to derivative exposure offsetting.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13243&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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