Reserve Bank of India (Non-Banking Financial Companies – Financial Statements: Presentation and Disclosures) Directions, 2025

1. Accounts rules for NBFCs

This paper sets how non-banking financial companies must show their accounts.

2. Start date

These Directions came into effect on the day RBI issued them.

3. Who is covered

These Directions apply to every non-banking financial company.

4. Primary Dealers included

Standalone Primary Dealers follow this rule too, except 3 named paragraphs.

1. Send a draft anyway

Even where more time is given, a draft balance sheet and the returns must reach RBI.

2. Balance sheet deadline

NBFCs must finish their balance sheet within 3 months of the year it covers.

BankPulse example. An NBFC's year runs to 31 March. The balance sheet for that year must be finalised within 3 months. That means by the end of June.

3. No smoothing of profit

The loss model may not be changed to smooth profit.

4. Ninety days needs a reason

Where an account past ninety days is not called bad, the reason goes to the Audit Committee.

5. 90-day default test

A loan is presumed not in default until it is 90 days past due.

6. 30-day risk trigger

Credit risk is presumed to rise sharply once payments are 30 days overdue.

7. 60-day outer limit

NBFCs cannot delay flagging rising credit risk beyond 60 days overdue.

8. Balance sheet on 31 March

The balance sheet and profit account must be made up as on 31 March each year.

9. Ind AS where it applies

A firm covered by the Ind AS rules must use them, with RBI's guidance on top.

10. Say why each book

The aim behind holding each set of assets must be set out.

11. A written policy on sales

A policy on sales out of the amortised cost book must be framed and shown in the notes.

12. Board-approved ECL method

The Board must approve the method used to calculate expected credit losses.

13. Board signs a model change

Any change to the loss model must be written down and passed by the Board.

14. Show those accounts

The number of such accounts and the sums due must be shown in the notes.

15. Cases go to the committee

Every such case must be put before the Audit Committee.

16. Hold both sets

Impairment must be held under Ind AS and the old asset rules worked out in parallel.

17. Provisions shown apart

Provisions made under RBI's rules must be shown apart, not set off against income or assets.

18. Ask RBI before delay

RBI's leave is needed before asking the Registrar to put off the balance sheet date.

19. Others use the old standards

Every other firm follows the notified accounting rules, so far as RBI allows.

20. Audit Committee signs overlays

Any hand adjustment to the model output needs the Audit Committee's approval.

21. Impairment Reserve

If old provisioning rules need more than Ind AS, the extra money is set aside in an Impairment Reserve.

22. Reserve is not capital

The impairment reserve does not count towards regulatory capital.

23. No withdrawal without leave

Nothing may be drawn from that reserve without RBI's prior permission.

1. Ninety-day average

Liquidity cover data is a plain average of daily figures over ninety days.

2. Show the previous period

Last year's figure must be shown beside every figure for this year.

3. Narrative comparatives too

Last year's words must be given too, where they help make this year clear.

4. Report the resolution plans

A lender under the stressed assets rules must show its resolution plans.

5. One common format

This rule gives every NBFC one common format for financial statement disclosures.

6. Conversion outside the ceilings

Shares taken on turning debt to equity in a rework fall outside the market limits.

1. Auditor disclosure duty

Auditors must note in their report if a subsidiary was wrongly left out.

1. Older rules cancelled

This document cancels the older financial-statement rules for Commercial Banks.

2. Old cases continue

Penalties and legal cases already started under the old rules still continue.