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SFB Financial Statement Directions 2025: Key Updates

Current · Source: Reserve Bank of India · RBI/DOR/2025-26/198 · issued 28 Nov 2025 · ~2 min read
Quick answerRBI issued new directions for Small Finance Banks on financial statement presentation and disclosures, effective November 28, 2025. These replace older guidelines, mandating compliance with updated formats, accounting standards, and disclosure norms to enhance transparency and uniformity.
The rule, in the simplest words
How it plays out — a real example

Rahul, a branch operations officer in Indore, ensures that all advances are classified correctly into their respective sectors. He reports the advances net of provisions made, excluding provisions towards Standard Assets, to maintain transparency and accuracy in the bank's financial statements.

What changed

RBI introduced the Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Directions, 2025, effective immediately from November 28, 2025. These directions consolidate and update requirements for balance sheet formats, profit and loss account compilation, and notes to accounts, replacing previous versions. Key additions include specific guidance on accounting standards, consolidated financial statements, and instructions on items like fraud provisioning and window dressing.

What it means for you

Small Finance Banks must align their financial reporting with the new directions, ensuring strict adherence to the Third Schedule formats and updated accounting standards. This enhances regulatory oversight and comparability across banks, but requires operational adjustments in reporting systems and internal processes. Banks should review and update their financial statement preparation workflows to ensure compliance.

What you must do

Who it affects

Small Finance Banks, Finance and accounting departments of SFBs, Compliance teams of SFBs, Auditors of SFBs

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

When do these directions take effect?

The directions came into force with immediate effect from November 28, 2025, as per the notification.

Do these directions replace older guidelines?

Yes, Chapter VI repeals and saves previous directions on the same subject, so SFBs must follow the 2025 version.

Are these directions applicable to all Small Finance Banks?

Yes, the applicability clause states they apply to all Small Finance Banks, collectively referred to as 'banks'.

📜 Read the original circular — full text as issued by RBI
Advances shall be classified on the sectoral basis as indicated. Advances, which qualify as priority sector lending according to extant Reserve Bank of India instructions are to be classified under the head ‘Priority Sectors’. Such advances shall be excluded from item (ii) i.e., advances to public sector. Advances to Central / State Governments and other Government undertakings including Government Companies and statutory corporations shall be included in the category ‘Public Sector’. All advances to the banking sector including Co-operative Banks shall come under the head ‘Banks’. All the remaining advances will be included under the head ‘Others’ and typically this category will include non-priority sector advances to the private, joint and co-operative sectors. Notes: 1. Advances shall be reported net of provisions made thereon (other than provisions towards Standard Assets). To the extent that Floating provisions have not been treated as Tier 2 capital, they shall also be netted off from advances. 2. Term loans reported shall not include loans repayable on demand. 3. Consortium advances shall be reported net of share of other participating banks / institutions. 4. All interest-bearing loans and advances granted to bank’s own staff shall be included here. 5. Advances to other banks / organisations shall be included here. 6. Interest accrued but not due should not be reflected here. Instead, it shall be shown under ‘Interest accrued’ in other assets. 7. Rights, licenses, and authorisations, etc., charged to the bank as security / collateral in respect of projects (including infrastructure projects) financed by them, shall not be reckoned as tangible security. Such advances shall be reckoned as unsecured. 8. Partial credit enhancement facilities to the extent drawn shall be treated as an advance. 9. The aggregate amount of inter - bank participations with risk sharing would be reduced from the aggregate advances outstanding by issuing bank. Participating bank shall show the amount of inter-bank participations under advances. Where the participation is without risk sharing, it shall be reflected by the participating bank as due from Banks under Schedule 9. 10. Reverse Repo with banks and other institutions having original tenors more than 14 days shall be shown under this Schedule under following head: i.A.(ii) ‘Cash credits, overdrafts and loans repayable on demand’’ ii.B.(i) ‘Secured by tangible assets’ iii.C.(I).(iii) Banks (iv) ‘Others’ (as the case may be)
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/DOR/2025-26/198 · issued 28 Nov 2025. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update internal policies and systems to comply with new disclosure requirements and accounting standard references.
📜 Compliance
  • Review the full directions document and map changes to your current financial reporting templates.
  • Train finance and compliance teams on the revised balance sheet and profit and loss account compilation instructions.
  • Ensure consolidated financial statements are prepared as per Chapter IV of the directions.
  • Monitor for any subsequent RBI clarifications or amendments to these directions.
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 (Small Finance Banks, Finance and accounting departments of SFBs, Compliance teams of SFBs, Auditors of SFBs), your first concrete step on “SFB Financial Statement Directions 2025: Key Updates” is: “Review the full directions document and map changes to your current financial reporting templates.” (RBI issued this 28 Nov 2025).

  1. Circular: RBI/DOR/2025-26/198 -- SFB Financial Statement Directions 2025: Key Updates
  2. Issued: 28 Nov 2025
  3. Action required: Review the full directions document and map changes to your current financial reporting templates.
  4. Action required: Update internal policies and systems to comply with new disclosure requirements and accounting standard references.
  5. Action required: Train finance and compliance teams on the revised balance sheet and profit and loss account compilation instructions.
  6. Action required: Ensure consolidated financial statements are prepared as per Chapter IV of the directions.
  7. Action required: Monitor for any subsequent RBI clarifications or amendments to these directions.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. 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=13111&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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