The Reserve Bank of India issued the Seventh Amendment Directions, 2026 to revise financial statement presentation and disclosure norms for commercial banks, aligning them with the 2026 Asset Classification, Provisioning and Income Recognition framework. The amendments mandate separate disclosure of provisions for Stage 1 and Stage 2 assets instead of netting them with advances, enhancing transparency. Changes in profit and loss reporting clarify treatment of interest income and investment income, while removing incorrect expense recognition practices. The directions also confirm that non-recognition of income on Stage 3 assets will not attract auditor qualifications. Extensive new disclosure requirements have been introduced, including detailed credit quality tables for investments, loans, guarantees, and commitments, along with reconciliation of loss allowances and fraud reporting. Banks must also disclose transitional capital impacts and unhedged foreign currency exposure policies. These reforms strengthen transparency, comparability, and risk assessment.
Reserve Bank of India
RBI/2026-27/35
DOR.STR.REC.15/21-04-018/2026-27 | Dated: April 27, 2026
Reserve Bank of India (Commercial Banks — Financial Statements: Presentation and Disclosures)- Seventh Amendment Directions, 2026
Please refer to Reserve Bank of India (Commercial Banks — Financial Statements: Presentation and Disclosures) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. Consequent to the issuance of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026 and in exercise of the powers conferred by the section 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 modify the Directions as under:
(1) Under the table titled (1) Instructions for compilation of balance sheet under Chapter-II Balance Sheet and Profit and Loss Account, with regard to Item: Other Liabilities and Provisions (Schedule 5) with Coverage: Others (including provisions), the Note 4 under the column “Notes and Instructions for compilation” shall be modified as below:
“Provisions towards assets under Stage 1 and Stage 2 shall not be netted from gross advances and shown separately as ‘Provisions against assets under Stage 1 and Stage Z- under ‘Others’ in Schedule 5 of the Balance Sheet.”
(2) Under the table titled (2) Instructions for compilation for compilation of Profit and Loss Account, with regard to Item: Interest Earned (Schedule 13) with Coverage : Interest / discount on advances / bills, the item (I) under column “Notes and Instructions for compilation” shall be modified to as below:
“Includes interest and discount on all types of loans and advances like cash credit, demand loans, overdrafts, export loans, term loans, domestic and foreign bills purchased and discounted (including those rediscounted), overdue interest and interest subsidy, if any, relating to such advances / bills. With regards to assets specified under paragraph 17 of the Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026, the computation of interest shall be as per aforesaid Directions.”
(3) Under the table titled (2) Instructions for compilation for compilation of Profit and Loss Account, with regard to Item: Interest Earned (Schedule 13 ) with Coverage : Income on investments, the item (II) under column “Notes and Instructions for compilation” shall be modified as below:
“Includes all income derived from the investment portfolio by way of interest / discount, dividend.”
(4) Under the table titled (2) Instructions for compilation of Profit and Loss Account, with regard to Item: Interest Expended (Schedule 15), the Notes item 2 under column “Notes and Instructions for compilation” shall stand deleted.
“While acquiring government and other approved securities, banks should not instead book it as an expense.”
(5) The Paragraph 6(2)(i) under Accounting Standard 9 — Revenue Recognition, shall be modified as below:
“Non-recognition of income by a bank in case of classification to Stage 3/non-performing advances/non-performing investments, in compliance with the regulatory prescriptions of the RBI, shall not attract a qualification by the statutory auditors as this would be in conformity with provisions of the standard, as it recognises postponement of recognition of revenue where collectability of the revenue is significantly uncertain.”
(6) Paragraph 6(11)(iii) of Accounting Standard 28 — Impairment of assets shall be modified as below:
“The Standard shall generally apply to non-banking assets acquired in settlement of claims only when the indications of impairment of the entity are evident.”
(7) Paragraph 10(1) (i) Composition of regulatory capital, shall be modified to insert item 10(1)(i)(a) as below:
“(i)(a) Transitional arrangement as provided under Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
A bank shall make appropriate disclosures in their financial statements regarding:
(1) whether the regulatory transitional arrangement has been applied; and,
(2) the impact of such arrangement on the bank’s regulatory capital and leverage ratios, as compared with the bank’s fully loaded capital and leverage ratios had such transitional arrangement not been applied.”
(8) Paragraph 10 (3) Investments, shall be modified to insert item 10(3)(x) and 10(3) (xi) as specified below:
10(3)(x) Credit quality of Investment assets that fall under the list of assets specified in paragraph 17 of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
(Amounts in r crore) |
||||||||||
Particulars |
As on March 31, current year |
As on March 31, previous year |
||||||||
Stage 1 |
Stage 2 |
Stage 3 |
Purchased
|
Total |
Stage 1 |
Stage 2 |
Stage 3 |
Purchased
|
Total |
|
Investment |
||||||||||
Investment type 1 |
||||||||||
Sovereign rated |
||||||||||
Rating Grade 1 |
||||||||||
Rating Grade 2 |
||||||||||
Rating Grade 3 |
||||||||||
Rating Grade x |
||||||||||
Gross Carrying Amount |
||||||||||
Impairment loss allowance |
||||||||||
Net Carrying amount |
||||||||||
Investment type 2 |
||||||||||
Sovereign rated |
||||||||||
Rating Grade 1 |
||||||||||
Rating Grade 2 |
||||||||||
Rating Grade 3 |
||||||||||
Rating Grade x |
||||||||||
Gross Carrying Amount |
||||||||||
Impairment loss allowance |
||||||||||
Net Carrying amount |
||||||||||
10(3) (xi) Reconciliation of the opening balance with the closing balance of the Loss allowance for Investments that fall under the list of assets specified in paragraph 17 of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026:
Investments |
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
|||||
Gross amount |
ECL loss allowance |
Gross amount |
ECL loss allowance |
Gross amount |
ECL loss allowance |
Gross amount |
ECL loss allowance |
Gross amount |
ECL loss allowance |
|
Balance as on April 1, the Year before Previous Year |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Transfer to Stage 1 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Transfer to Stage 2 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Transfer to Stage 3 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Net remeasurement of loss allowance |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
New financial assets originated during the year |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Matured or repaid |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Write-offs |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Balance as on March 31, Previous Year |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Transfer to Stage 1 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Transfer to Stage 2 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Transfer to Stage 3 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Net remeasurement of loss allowance |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
New financial assets originated during the year |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Matured or repaid |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Write-offs |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Balance as on March 31, Current Year |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(9) The table under paragraph 10 (4) (ix) shall be modified as below:
(ix) Fraud accounts: A bank shall disclose details on the number and amount of frauds as well as the provisioning thereon as per template given below.
| Current year | Previous year | ||
| Number of frauds reported | |||
| Amount involved in fraud ( crore) | |||
| Amount of provision made for such frauds (crore) |
(10) Paragraph 10 (4) Asset Quality shall be modified to insert item 10(4) (xii) to 10(4)(xviii).
“10(4) (xii) Credit quality of Loan Assets that fall under the list of assets specified in paragraph 17 of Reserve Bank of India Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
(Amounts in r crore) |
||||||||||
Particulars |
As on March 31, Current Year |
As on March 31, Previous Year |
||||||||
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
|
Loans and advances |
||||||||||
Product type 1 |
||||||||||
Current |
||||||||||
Past due 1-30 days |
||||||||||
Past due 31-60 days |
||||||||||
Past due 61-90 days |
||||||||||
Past due 90 days |
||||||||||
Gross Carrying Amount |
||||||||||
Impairment loss allowance |
||||||||||
Net Carrying amount |
||||||||||
Product type 2 |
||||||||||
Current |
||||||||||
Past due 1-30 days |
||||||||||
Past due 31-60 days |
||||||||||
Past due 61-90 days |
||||||||||
Past due 90 days |
||||||||||
Gross Carrying Amount |
||||||||||
Impairment loss allowance |
||||||||||
Net Carrying amount |
||||||||||
10(4) (xiii) Credit quality of Loan commitments and financial guarantees that fall under the list of assets specified in paragraph 17 of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
(Amounts in r crore) |
||||||||||
Particulars |
As on March 31, Current Year |
As on March 31, Previous Year |
||||||||
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
|
Notional Loan
|
||||||||||
Product type 1 |
||||||||||
Product type 2 |
||||||||||
Total |
||||||||||
Impairment loss allowance |
||||||||||
Carrying amount |
||||||||||
Financial guarantees |
||||||||||
Product type 1 |
||||||||||
Product type 2 |
||||||||||
Total |
||||||||||
Impairment loss allowance |
||||||||||
Carrying amount |
||||||||||
The above table shall also be provided for all other financial instruments which come under the purview of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026.
10(4) (xiv) Summary of Loan assets
(Amounts in r crore) |
||||||||||
Particulars |
Current Year |
Previous Year |
||||||||
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
Stage 1 |
Stage 2 |
Stage 3 |
POCI |
Total |
|
Gross carrying amount |
||||||||||
Less: ECL
|
||||||||||
Net carrying amount |
||||||||||
10(4) (xv) Reconciliation of the opening balance with the closing balance of the loss allowance for Loans in terms of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
Stage 1 |
Stage 2 |
Stage 3 |
Total |
|||||
Gross loan amount |
ECL loss allowance |
Gross loan amount |
ECL loss allowance |
Gross loan amount |
ECL loss allowance |
Gross loan amount |
ECL loss allowance |
|
Balance as on April 1, Year before Previous Year |
||||||||
Transfer to Stage 1 |
. |
_ |
. |
. |
. |
|||
Transfer to Stage 2 |
||||||||
Transfer to Stage 3 |
||||||||
Net remeasurement of loss allowance |
||||||||
New financial assets originated during the year |
||||||||
Matured or repaid |
– |
– |
– |
– |
– |
|||
Write-offs |
||||||||
Balance as on March
|
– |
– |
– |
– |
– |
|||
Transfer to Stage 1 |
||||||||
Transfer to Stage 2 |
||||||||
Transfer to Stage 3 |
– |
. |
. |
. |
. |
|||
Net remeasurement of loss allowance |
. |
. |
. |
. |
. |
|||
New financial assets originated during the year |
||||||||
Matured or repaid |
||||||||
Write-offs |
||||||||
Balance as on March
|
||||||||
10(4) (xvi) Reconciliation of the opening balance with the closing balance of the loss allowance for Loan Commitments in terms of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
| (Amounts in r crore) | |||||
| Loan commitments | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| Balance as on April 1, The year before previous Year | |||||
| Net remeasurement of loss allowance | |||||
| New loan commitments | |||||
| Balance as on March 31, Previous Year | |||||
| Net remeasurement of loss allowance | |||||
| New loan commitments | |||||
| Balance as on March 31, Current Year | – | – | – | – | – |
10(4) (vii) Reconciliation of the opening balance with the closing balance of the loss allowance for Financial Guarantee Contracts in terms of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
| (Amounts in r crore) | |||||
| Financial Guarantee Contracts | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| Balance as on April 1, The year before previous Year | |||||
| Net remeasurement of loss allowance | |||||
| New financial Guarantees | |||||
| Balance as on March 31, Previous Year | |||||
| Net remeasurement of loss allowance | |||||
| New financial Guarantees | |||||
| Balance as on March 31, Current Year | – | – | – | – | – |
10(4)(viii) Reconciliation of the opening balance with the closing balance of the loss allowance for other financial instruments in terms of Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2026
| (Amounts in r crore) | |||||
| Others | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| Balance as on April 1, The year before previous Year | – | – | – | – | – |
| Net remeasurement of loss allowance | |||||
| New financial instruments originated | – | – | – | – | _ |
| Balance as on March 31, Previous Year | – | – | – | – | – |
| Net remeasurement of loss allowance | – | – | – | – | _ |
| New financial instruments originated Y | – | – | – | – | – |
| Balance as on March 31, Current Year | |||||
(11) The table specified under paragraph 10(5)(iii) Risk category-wise country exposure, shall be modified as below:
| Amount in r crore) | ||
| Risk Category* | Exposure (net) as at March… (Current Year) |
Exposure (net) as at March… (Previous Year) |
| Insignificant | ||
| Low | ||
| Moderately Low | ||
| Moderate | ||
| Moderately High | ||
| High | ||
| Very High | ||
| Total | ||
*Till a bank moves over to internal rating systems, it shall use the seven-category classification followed by Export Credit Guarantee Corporation of India Ltd. (ECGC) for the purpose of classification for country risk exposures. ECGC shall provide to a bank, on request, quarterly updates of their country classifications and shall also inform banks in case of any sudden major changes in country classification in the interim period.
Note: If a bank has no exposure to country risk in both the current and previous year, it may omit disclosure of the table while mentioning that it has no exposure to country risk.”
(12) The paragraph 10(5)(vii) Unhedged foreign currency exposure, shall be modified as below:
“Unhedged foreign currency exposure: A bank shall disclose its policies to manage currency induced credit risk. The bank shall also disclose the incremental capital held by it towards this risk.”
4. The above amendments shall come into force from April 01, 2027.
(Vaibhav Chaturvedi)
Chief General Manager
